SINGAPORE: Malaysia's Axiata Group Bhd, the largest shareholder in Singapore-listed M1, is likely to reject an offer from Keppel Corp and Singapore Press Holdings Ltd (SPH) to acquire the telco, a source with direct knowledge of the matter said on Thursday (Sep 27).
Axiata, which has a 28.3 per cent stake in M1, views the S$2.06 per share offer as "opportunistic" and "inadequate", said the source who did not want to be named.
The source added that Axiata is also in talks to team up with private equity firms and other companies, as it considers options to instead launch its own offer to increase its stake in M1.
Keppel Corp and SPH are offering to buy the remaining shares they don't own in M1, in a deal worth up to about S$1.27 billion. The offer of S$2.06 per M1 share is a 26 per cent premium to M1's last closing share price of S$1.63 on Friday.
The offer comes as M1 shares are down nearly 60 per cent from an all-time high of S$3.99 in early 2015. Keppel and SPH together hold a 33.27 per cent stake in M1, which has struggled to boost revenue and tackle a fall in profit.
OFFER SHOULD REFLECT ACCURATE FUTURE VALUE OF M1: AXIATA
In a statement on Thursday, Axiata said it was evaluating all its options and it suggested that the Keppel-led offer price was not satisfactory.
"The company has been clear in our position that the offer should reflect the accurate future value of M1 (inclusive of an acceptable control premium), consistent with market standards," Axiata said.
It added that it will consider factors such as M1's "depressed" share price for more than a year versus its "true value potential, long-term growth potential, and future competitive outlook".
Daiwa Capital Markets said Axiata was unlikely to agree to the offer and the Malaysian firm had adequate resources to engage in a bidding war of up to S$2.50 per share.
"We view the current offer as highly opportunistic and perhaps driven by financial rather than strategic considerations," analyst Ramakrishna Maruvada said in a report.
KCL and SPH said on Thursday they would aim to stem the decline in M1's shares through a "combination of transformational efforts which are expected to take several years". They did not give details of their plans.
The offer is subject to conditions, including approval from Singapore's Info-communications Media Development Authority on or before Mar 27, 2019.