Pos Malaysia accepts DRB-Hicom's offer

Pos Malaysia accepts DRB-Hicom's offer

By Tan Siew Mung / theedgemarkets.com   | December 16, 2015 : 9:45 PM MYT

KUALA LUMPUR (Dec 16): [size=16]Pos Malaysia Bhd ([You must be registered and logged in to see this image.] Valuation: 1.40, Fundamental: 2.20) has accepted DRB-Hicom Bhd (Valuation: 2.00, Fundamental: 0.00)'s offer for sale of the latter's wholly-owned KL Airport Services Sdn Bhd (KLAS) and a parcel of industrial land in Shah Alam, for RM835.16 million.

Pos Malaysia announced in a filing with Bursa Malaysia that it had accepted DRB-HICOM's conditional offer today, and that the sale and purchase agreements (SPA) to effect the transactions would be executed within three months from the acceptance of the offer.

The acceptance, however, is subject to the results or findings of the due diligence exercise to be conducted by Pos Malaysia and execution of the SPA within the exclusivity period.

The proposed acquisitions of KLAS and the Section 28 land in Shah Alam, would also be conditional upon the approval of the company’s shareholders at an extraordinary general meeting to be convened.

"A detailed announcement on the proposed acquisitions of KLAS and the land would be made upon finalisation of the terms and conditions of the transactions and execution of the SPA," it added.

On Dec 10, DRB-Hicom had announced its offer to sell KLAS and part of a freehold industrial land in Shah Alam to Pos Malaysia for RM835.16 million, to consolidate its logistics business under Pos Malaysia.

The acquisition, subject to the complete capitalisation of RM552.9 million owed by KLAS to DRB-Hicom and the transfer of 100 acres of land in Kedah from Konsortium Logistik Bhd (owned by KLAS) to DRB-Hicom, would be satisfied via the issuance of 250.8 million new ordinary shares in Pos Malaysia at an issue price of RM3.33 a share.

According to Hong Leong Investment Bank Bhd ([You must be registered and logged in to see this image.] Valuation: 1.45, Fundamental: 2.00) in a note dated Dec 11, upon the completion of the exercise, DRB-Hicom may own up to 55.6% stake in Pos Malaysia (based on current share price), and Pos Malaysia will become a subsidiary of DRB-Hicom, from being a 32.2% associate.

DRB-Hicom will apply for exemption from the Securities Commission Malaysia from undertaking a mandatory takeover offer of Pos Malaysia, after the disposal exercise.

In a separate filing, Pos Malaysia said Japan-based Mitsubishi UFJ Financial Group Inc (MUFG) ([You must be registered and logged in to see this image.] Valuation: None, Fundamental: None) had on Dec 10, acquired 20,300 shares of Pos Malaysia, raising its indirect shareholding in the postal firm to 7.56%.

Pos Malaysia closed three sen or 1.15% higher at RM2.64 today, for a market capitalisation of RM1.4 billion. DRB-Hicom, on the other hand, was down 1 sen or 0.83% at RM1.20, valuing it at RM2.3 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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