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"That's because in deciding for privatisation, the deal hugely favours the controlling party already - hence someone must look out for the long-suffering small tenacious investor"

May 3 (Bloomberg) -- T. Ananda Krishnan, Malaysia's second- richest man, offered to buy full control of Maxis Communications Bhd. for 15.8 billion ringgit ($4.6 billion) in Asia's biggest telecommunications acquisition in three years.
Binariang GSM Sdn., owned by Krishnan, offered to buy 40 percent of Maxis at 15.60 ringgit each, 20 percent higher than the closing price on April 27 before the stock was suspended for the announcement, CIMB Investment Bank Bhd. said in a statement today. The purchase values the company at 39.5 billion ringgit.

That's bloody close to the 41bn ringgit heard over the weekend. However, I am in agreement with Moola that the offer is too low, and probably will not succeed. Moola has posted his own valuation on Maxis, which places it at RM24.00. I think a fair price for the VGO is in the region of RM17.50-RM18.00. Since its Binariang making the incestuous offer to Maxis, let's see how professional the Board is at Maxis, and let's see how independent are the independent directors there, and let's see if Bursa and the SC try to protect the interests of the tenacious minority shareholders.

Open their last report quarterly earnings:

If you add back the depreciation of 1.014 billion, Maxis operations generated 3.352 billion ringgit!! ... consider that you have cash and you want an investment that can generate 3.352 Billion ringgit, how much do you reckon that you have to invest in a business that generates say 6%.

Is 6% a good return?

It's simple math. How much would you need to invest at 6% to generate a return of 3.352 billion? Answer? 3.352 divided by 6% = RM55.4 billion!! If someone offered you less, would you accept?

To grow in India, Indonesia and locally in broadband and 3G, the funding requirements are huge, but that is not really an issue, said Jamaludin. This year alone, the company needs RM2.77bil (of which RM1.57bil is for India and RM1.2bil for Malaysia) and in India alone..

And this is confirmed if you look at the cash flow. If you are a current shareholder of Maxis, your share of this 2.725 Billion has already being invested in India and Indonesia by Maxis. How should there be a value placed on these investments? So how much does Usaha Tegas wants to offer you?


cin said…
"If you are a current shareholder of Maxis, your share of this 2.725 Billion has already being invested in India and Indonesia by Maxis. How should there be a value placed on these investments?..."

Gentlemen, thank you for opening our eyes...
tucows said…

the 20% offer is good enough. RM24 is long way you can get that
zentrader said…
Sifu Dali,

Seem like new game in town, next one will be cash cow Resort? TQ

Salvatore_Dali said…

i guess that where me and moola agree on, that the deal is likely to fail... i think The Capital group analysts would be thinking along the same lines as us, I'd be very surprised if the funds do not protest.

Just because the offer px was at an all time high never reached before levels does not automatically make it right. Many minority holders have varying INVESTING OBJECTIVES... someone who bot at RM10 maight be happy at RM15.60 ... but someone who bot and held on for 4 years at RM6.00 might not, that person was looking for capital gains and growing dividends on a yearly basis - the guy was thinking that his stock is finally turning out to be a Resorts/HSBC ripening nicely, and then the owner says no more...??? RM16 looks cheap to that kind of investor.

Pls don't use sifu, people being called sifu are usually near death and cannot have sex anymore. Resorts is always a candidate as it is a printing machine, but growth is minute, so not attractive to take it private as they would have to load up on debt ... already their balance sheet is extended at Sentosa, London Clubs, and the still thirsty StarCruise.
Pricechart said…
D gi alrely so high...

Ma xi going to zoom to that fif teen sick ty pry...

Mr. Chee? What to buy?

T nia Ma......dat's about D oly wan let....

Don care how lah...don care why lah.. as long as money 2 be made....can olely lah!
Ali BAba said…
halo Salvatore_Dali, what is your view on this Ebworx? will it reach RM1.50 ? are there any privatise or take over issue?

tucows said…

this whole de-listing fracas was conceived early of this year. At that time that share price was RM10.

for those "internal" hands that knew what was forthcoming was accumulating since then knowingly what results is forthcoming. Thus if one have been quietly accumulating since then, a 20% premium at this point seem attractive at this point.
Salvatore_Dali said…
ebworx, no comment, not sufficiently aware of the stock.
Salvatore_Dali said…

view changed on ebworx, looks ok to buy and hold

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