SINGAPORE: Keppel Corp, in collaboration with Singapore Press Holdings, is seeking a majority stake in telecommunications company M1, in a deal worth up to S$1.27 billion.
In separate media releases on Thursday (Sep 27), both companies said they will make a pre-conditional voluntary general offer for M1 through a separate unit, Konnectivity, which is majority-held by KCL. The offer price will be S$2.06 per M1 share in cash, a premium of 26 per cent to the stock's last closing price.
The offer will not be extended to Keppel Telecommunications and Transportation as it is a related corporation, KCL said.
SPH currently has a 13.45 per cent stake in M1 while KCL has 19.7 per cent through Keppel T&T, according to Reuters. Both companies and their related parties have a deemed interest of 33.27 per cent in M1, which has a market capitalisation of S$1.51 billion.
SPH said that it plans to invest up to S$51.3 million in cash to partially fund the offer. The company's stake may also increase up to 16.3 per cent, it said, if the offer is successful.
This is a strategic initiative to gain majority control of M1 in order to drive business changes in M1 that will enable the telco to compete more effectively in the telecommunications industry, both KCL and SPH said.
"The initiative complements Keppel’s mission as a solutions provider for sustainable urbanisation, which includes connectivity," KCL said, adding that M1 can serve as a digital platform and connectivity partner to complement and augment Keppel’s current suite of solutions.
SPH CEO Ng Yat Chung said: "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 has to be approved by the Info-communications Media Development Authority. It will become unconditional when the offerer and its concert parties obtain more than 50 per cent of the issued share capital of M1.
Trading in shares of Keppel, Keppel T&T, SPH and M1 was halted ahead of the announcements.
DBS Bank is the financial adviser to Keppel, while Credit Suisse (Singapore) is advising SPH.
Separately, Keppel said it was seeking to privatise Keppel T&T for S$1.91 per share, a 40 per cent premium. It already owns a 79.22 stake in Keppel T&T, which provides logistics and data centre services.
Reuters reported on Wednesday that KCL and SPH were looking to buy out Malaysia's Axiata Group's 28.3 per cent stake in M1.
Axiata, who is the largest shareholder in M1, said on Wednesday that it is reviewing its stake in the telecoms company.
"Axiata expects KCL and SPH to reflect M1's future value and incorporate acceptable control premium in their proposed transaction," it said in a statement.
In July 2017, Axiata, Keppel and SPH considered, and then called off, a strategic review of their M1 shareholding, which sources said was due to a lower-than-expected offer from external parties.
Mobile telecoms competition is heating up in Singapore, with Australia's TPG Telecom seeking to launch a new service after winning a license to become the city-state's fourth telecom operator. M1 is considered to be the most vulnerable to new competition.
Axiata said it is in discussions to appoint an advisor with a financial institution that would "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".
Shares in Axiata closed 4.2 per cent higher on Wednesday.
Trading of M1 shares has been suspended since Monday but the stock has fallen close to 10 per cent over the past 12 months, and 59 per cent from its record high of S$3.99 in February 2015 to S$1.63 on Monday.