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Binariang bids for Maxis

Binariang GSM Sdn Bhd, a company owned jointly by tycoon T. Ananda Krishnan’s Usaha Tegas Sdn Bhd and its affiliates, has offered to buy shares of Maxis Communications Bhd in cash at RM15.60 per share.

This makes the privatisation deal worth RM39.9 billion, becoming the largest ever corporate transaction in Malaysia and one of the largest buyouts ever in Asia Pacific.

CIMB Investment Bank’s group chief executive Datuk Nazir Razak described the transaction as “a reflection of the maturity and depth of the Malaysian financial markets“.

Such a transaction might not have been possible three years ago, he said at a press briefing on the deal here today.

Nazir said the deal will shift Maxis’ primary source of financing from the Malaysian equity market to the debt market.

CIMB and ABN AMRO will organise the financing, most likely substantially through the local ringgit Islamic bond market,” he said.

CIMB Investment Bank and ABN AMBRO Asia Advisers (M) Sdn Bhd have been appointed as the joint advisers to Binariang for the offer.

Earlier, Binariang said in a statement issued by CIMB Investment Bank that it had obtained on May 2, 2007, undertakings from parties acting in concert acceptance to the offer, representing 59.53 percent shareholdings in Maxis.

Binariang added that in the event Maxis does not comply with the shareholdings spread requirement of Bursa Malaysia for at least 25 percent to be in the hands of a minimum 1,000 public shareholders, it does not intend to maintain the listing status of Maxis.

On the rationale for the buyout, Nazir said Binariang believed that Maxis has the potential to accelerate its growth by continuing to look at expanding its business overseas.

He said Maxis was a Malaysian telecommunication operator at its initial public offering (IPO) in 2002 and but it has now expanded to markets such as India and Indonesia.

Maxis shares are still suspended from trading pending further details of the privatisation offer. It was last traded at RM13.00.

Binariang, in a conditional takeover offer to acquire all voting shares in Maxis, said the offer shares comprised the existing 2,531,696,000 issued and paid-up ordinary shares of 10 sen each in Maxis as at April 20, 2007, and any new Maxis shares that might be issued.

At the offer price of RM15.60, the minorities’ shares are valued at RM16.40 billion, bringing a total return to stakeholders of 301 percent (including dividends) and representing an internal rate of return of 36 percent annually.

The offer price represents a premium of 20 percent over Maxis’ closing price of April 27, 2007, of RM13.00 and a premium of 43 percent over the six-month volume weighted average price of RM10.88.

It is also substantially above the highest ever price of RM13.20 registered by Maxis shares since they were listed in July 2002.

On Monday, Maxis said it had received notification from Usaha Tegas that the company and its affilliates intended to launch a voluntary general offer through a special purpose vehicle (SPV) for all the ordinary shares of Maxis.

Binariang is currently dormant and its intended principal activity is investment holding.

Besides Usaha Tegas and its affiliates, the other shareholders of Binariang are a number of Bumiputera trustee companies, of which the holding company is Harapan Nusantara Sdn Bhd.

Meanwhile, Binariang’s chairman Raja Datuk Arshad Raja Tun Uda said the company is committed to the substantial reinvestment of Maxis’ earnings to satisfy its growth aspirations.

According to him, the privatisation will eliminate the impact of earnings volatility on public stakeholders and provide Binariang with an opportunity to consolidate the company.

“It will also provide Binariang with the opportunity to seek a fresh listing of Maxis shares on Bursa Malaysia when it achieves a more stable earnings profile,” he said.

However, he added, “there is no intention for an overseas listing”.

Asked why Maxis took the exit point now from the equity market, Raja Arshad said: “It is liked a Formula One racing… when the lights turn, you go.”

“When the conditions are all right, then you go. If you have done this three years ago, maybe there was no financing and the price would have been different at that time,” he said.

He also said that “there is no plan for management change and business is as usual”.

Binariang expects the privatisation deal to be completed in two months.-Bernama

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy