Highlight MMC Corp to up stake in NCB, triggers MGO

by **Cals** Tue 20 Oct 2015, 00:19

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[size=28]MMC Corp to up stake in NCB, triggers MGO

By Meena Lakshana / theedgemarkets.com | October 19, 2015 : 10:25 PM MYT

KUALA LUMPUR (Oct 19): MMC Corp Bhd ([You must be registered and logged in to see this image.] Valuation: 2.40, Fundamental: 1.10) plans to acquire an additional 53.42% stake in NCB Holdings Bhd ( Valuation: 0.80, Fundamental: 2.05) from Permodalan Nasional Bhd (PNB) andAmanahRaya Trustees Bhd for RM1.11 billion or RM4.40 per share, thereby increasing its holding in the port operating company to 83.55%, from 30.13% currently.

This would trigger a mandatory general offer (MGO) for the remaining 16.45% of NCB's shares that it doesn't already own, and pave the way for MMC to become the country's largest port operator.

In a filing with Bursa Malaysia, MMC said its wholly-owned subsidiary, MMC Port Holdings Sdn Bhd, signed a conditional sale of shares agreement with PNB and AmanahRaya Trustees today, to acquire 251.2 million NCB shares, representing a 53.42% equity interest in NCB.

The RM4.40 per share offer represents a premium of 1.38%, 2.56%, 6.28% and 18.6% over the five-day, one-month, three-month and six-month volume-weighted average price (VWAP) of NCB shares, up to and including Oct 16, 2015 of RM4.34, RM4.29, RM4.14 and RM3.71 respectively.

The offer also implies a price-to-book multiple of 1.47 times, based on the audited consolidated net assets of NCB as at Dec 31, 2014; and enterprise value/ebitda multiple of 17.48 times.

Upon completion of the proposed MGO, MMC said it does not intend to maintain the listing status of NCB on the Main Market of Bursa Malaysia. However, the proposed acquisition is subject to the approval of MMC shareholders at an extraordinary general meeting to be convened before Jan 19, 2016.

The two major business segments of the NCB Group are port operations and logistic operations, under Northport (Malaysia) Bhd and Kontena Nasional Bhd respectively.

MMC said the proposed acquisition is strategic, as it expands its presence in the port business from south to west of Peninsular Malaysia. In addition, through the proposed acquisition, MMC may be able to capture operational and cost synergies, which would further enhance the financial performance of its port and logistics business divisions.

"The consolidated gearing of MMC will increase, in view that the consideration for the proposals will be fully satisfied via bank borrowings," it added.

The proposals are expected to be completed by the first quarter of 2016.

MMC has been gradually increasing its stake in NCB, since it first acquired a 15.73% equity interest in the latter fromMISC Bhd ([You must be registered and logged in to see this image.] Valuation: 0.80, Fundamental: 1.20) on Dec 2, 2014. This year, it acquired another 5.32% and 9.08% stakes in NCB, from Port Klang Authority and Kumpulan Wang Persaraan (Diperbadankan) respectively.

MMC (fundamental: 1.1; valuation: 2.4)'s shares closed one sen or 0.43% lower at RM2.40 today, bringing its market capitalisation to RM7 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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