KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Thai billionaire Sarath Ratanavadi is set to merge his power company with an affiliate that owns Thailand’s most valuable mobile phone operator, creating a business worth US$20.5 billion (RM95.82 billion) based on Tuesday’s closing prices.
Merger Details:
- Companies Involved: Gulf Energy Development Pcl will merge with its telecommunications unit Intouch Holdings Pcl.
- Share Exchange Ratio: Existing Gulf Energy shareholders will receive 1.02974 shares of the merged entity for each Gulf share held, while Intouch holders will get 1.69335 shares for each Intouch share held. Gulf currently owns about 47.4% of Intouch.
Strategic Goals:
- New Business Focus: According to Varorith Chirachon, executive director at SCB Asset Management Co, the merger aims to rebrand Gulf Energy from a power producer to a leading telecommunications, technology, and digital player.
- Business Expansion: The merger will allow the combined entity to maximize future operations and investments, simplify the shareholding structure, and explore new growth opportunities in energy, infrastructure, and the digital landscape.
Comments from Sarath:
- Combined Expertise: Sarath highlighted that the combined expertise would benefit both companies and stakeholders, increasing the potential of the new company to lead in energy and telecommunications.
- Focus Areas: The company will expand its renewable energy portfolio and significantly focus on digital expansion.
Tender Offers and Financial Moves:
- Tender Offer: Gulf Energy, Intouch, and Singtel Strategic Investments Pte Ltd, along with Sarath, will make a tender offer for 36.25% of Advanced Info Service Pcl at 216.30 baht (RM28.14) per share.
- Share Movements: Advanced Info shares rose by as much as 3.2% in early trading on Wednesday, while Gulf Energy gained 4.7%.
- Special Dividend: The board of Intouch approved a special dividend payout of 4.5 baht per share from retained earnings.
Financial Analysis:
- Value-Neutral Transaction: According to JPMorgan Securities (Thailand) Co, the transaction is value-neutral for Gulf Energy, with special dividends and lower cost obligations being minor positives. However, the new entity may face a 5%-7% dilution in earnings per share due to amortization expenses.
Singtel's Involvement:
- Support and Benefits: Singapore Telecommunications Ltd (Singtel) supports the merger, which will simplify its shareholding in Advanced Info by removing Intouch as an intermediary. Singtel currently holds 24.99% of Intouch, which owns 40.44% of Advanced Info.
- Financial Gain: Singtel will gain about a 9% stake in the new company and book a gain of S$400 million (US$298 million or RM1.39 billion) from the merger.
Additional Tender Offer:
- Thaicom Pcl: Gulf Energy, Intouch, and Sarath will also offer to buy 58.9% of Thaicom Pcl, a satellite operator, at 11 baht per share.
Timeline and Advisors:
- Completion Date: The restructuring is expected to be completed in the second quarter of next year, subject to regulatory approvals.
- Advisors: Bualuang Securities and UBS AG are advising Gulf Energy on the transaction.
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