I was going through some comments in some forums, most were negative on the news of selling 100% of MAAB for RM344m. Do not mistake MAAB for MAAH, the listed vehicle. The listed vehicle is MAAH.
MAA Holdings Bhd owns:
100% MAA Berhad
75% MAA Takaful
100% MAA Corp Sdn Bhd
49% MAA Bancwell Trustee
The deal does not include MAAH's Islamic insurance unit, MAA Takaful Bhd and the rest, which are quite attractive on its own. However, it is learnt that both parties may talk about the takaful business once the latest deal is concluded.
Zurich FS' acquisition of MAAB may spell the end of its alliance with Koperasi MCIS Bhd through their joint venture, MCIS Zurich Insurance Bhd. Koperasi MCIS holds a 43.69 per cent stake in the joint venture, while Zurich FS owns 40 per cent. In 2009, Business Times reported that Zurich FS, Switzerland's biggest insurer, may sell its shares in MCIS Zurich after a failed plan to expand the business had strained relationship between the major shareholders.
"It is well known that Zurich FS has been planning to reposition its operation here since early 2009. It has considered several options, including acquiring an alternative licence and gaining control of another insurer such as MAA," said the source.
Nevertheless, Zurich FS could also merge MAAB with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAAB.
Zurich Insurance's 70 per cent stake in MAAB is the maximum allowed under Bank Negara Malaysia's (BNM) relaxed foreign ownership rules. BNM does not allow insurers to own two insurance companies in Malaysia. This means that Zurich FS must sell its MCIS Zurich's insurance business or merge the insurers.
Though MAA Holdings got the approval to sell 100% of MAAB to Zurich, that would contravene the 70% rule, unless Zurich gets an exemption, or a time frame to sell down the 30%.
It is also understood that Zurich FS may have had prior engagement with BNM to explain its intention and address its concerns.
As at end of 2010, MAA Holdings has a net asset per share of RM0.94. Its paid up is 304.3m shares. There are no major liabilities that is not covered by its net assets.
Verdict: The deal is very good for MAA Holdings, with their remaining Takaful business and cash, they could go into takaful in a big way, possible merging or buying a listed/unlisted takaful business ... I would think RM1.50-1.60 is the fair value as the game plan unfolds.