The conglomerate Keppel Corporation Limited (KCL) collaborated with Singapore Press Holdings (SPH) to make an offer of up to S$1.27 billion for a majority stake position in M1 Limited telecommunications company.
On Thursday, September 27, Keppel and SPH announced that the pre-conditional voluntary general offer they are making for M1 will be S$2.06 per M1 share in cash, making a premium of 26 percent to the stock’s last closing price. The offer will be made through separate entity Konnectivity, where KCL is a majority shareholder. They clarified that Keppel Telecommunications and Transportation will not be a part of the deal because of the related nature of its industry.
This move is all part of a strategy push for Keppel and SPH to gain majority control of M1, with the intended result of effecting business changes to bring M1 up to a more competitive level in the telecommunications industry.
SPH revealed its intentions to invest up to S$51.3 million in cash, which will partially fund the offer. If the offer pushes through favorably, it might drive SPH’s stake in M1 to 16.3 percent from the current figure of 13.45 percent. KCL’s share, on the other hand, is at 19.7 percent through Keppel T&T, as reported by Reuters. SPH and KCL, along with their associated parties, own a deemed interest of 33.27 percent in M1 and a market capitalisation of S$1.51 billion.
Statements made by KCL, which is being advised financially by DBS Bank, and SPH, which is being advised by Credit Suisse, show how strategic this move is.
“The initiative complements Keppel’s mission as a solutions provider for sustainable urbanisation, which includes connectivity,” affirmed KCL, noting that having M1 as a connectivity partner with its digital platform will “complement and augment Keppel’s current suite of solutions”.
CEO Ng Yat Chung spoke for SPH, saying, “We also see opportunities for SPH to leverage M1’s mobile platform to offer on demand and ready digital content to better serve our customers. We look forward to working together to utilise our resources and expertise to best develop M1.”
The offer, which will become unconditional when KCL, SPH and its affiliated parties acquire more than 50 percent of the issued share capital of M1, still has to be approved by the Info-communications Media Development Authority. Prior to the announcements, trading in shares of Keppel, Keppel T&T, SPH and M1 has been frozen for the time being.
M1’s stock figures have gone down 10 percent over the last year, and 59 percent from S$3.99 in February 2015 to S$1.63 on Monday.
Keppel currently owns a 79.22 percent stake in Keppel T&T, which takes care of their data centre and logistics services. Keppel has declared its intention to privatise Keppel T&T for S$1.91 per share, a 40 per cent premium.
KCL and SPH announced on Wednesday that they were in talks to buy out Axiata Group’s share of 28.3 percent in M1. Malaysia’s Axiata, the largest shareholder in M1, is currently reviewing its position in the telecoms company.
Axiata, Keppel and SPH originally discussed a review of their M1 shares in July of 2017, but plans were called off because offers from external parties were too low.
Axiata said that it now “expects KCL and SPH to reflect M1’s future value and incorporate acceptable control premium in their proposed transaction”.
Axiata, whose shares closed at 4.2 percent higher on Wednesday, shared that it is searching for a financial institution to advise them and “review various options available to Axiata with the sole objective that the company continues to vigorously protect and enhance shareholders’ value of both Axiata and M1”.
The mobile telecommunications industry in Singapore has been seeing a lot of change and action. Australia’s TPG Telecom won the license to become Singapore’s fourth telecommunications company, with a bid of S$105 million, besting MyRepublic’s S$102.5 million bid. Of the other three telcos, M1 needs to watch out for the new competition in order to keep their position.