RHB Research equity research analyst Syahril Hanafiah is confident the bid will go through considering the current acceptance level of 86% is now nearing the 90% mark, the acceptance condition for the bid to succeed.
“Such extensions are nothing extraordinary as this would give more time for minority shareholders to decide (on the RM11 per share offer),” he told FMT.
In an announcement filed with Bursa Malaysia yesterday, GDA said the deadline has been extended from Jan 17 to to Jan 24. The initial deadline was set for Jan 8.
Syahril said that since the offer price exceeds its estimated valuation, RHB advises investors to accept the privatisation offer.
“Post extension, we still maintain our ‘neutral’ call with an unchanged target price of RM11, matching the offer price,” he said.
A foreign bank analyst concurred that the takeover bid would likely succeed as the high acceptance level of 86% is close to the 90% threshold.
“Those who do not accept the offer risk eventually holding shares in a non-liquid company. The closing gap to the 90% threshold should help the rest of the shareholders make a decision.
“I think the extension is normal due to logistics issues as investors could need more time to submit their acceptance. This is especially so as the offer was made in December, when most investors were away.
“As a private entity, MAHB would be able to execute its strategic initiatives with fewer hurdles compared to a public-listed firm which has more layers of scrutiny and approvals,” he said, adding that a successful takeover by GDA would be beneficial for MAHB.
As of yesterday, GDA, comprising Khazanah Nasional Bhd, Employees Provident Fund, Abu Dhabi Investment Authority, and Global Infrastructure Partners, has garnered 86.18% of the total issued shares, just 3.82% short of the 90% acceptance rate.
MIDF Research’s head of research Imran Yassin Md Yusof said it is not out of the ordinary for extensions of deadline in such corporate exercises.
“Therefore, we are not surprised whenever an offer is being extended. Some examples of corporate exercise extensions are the privatisation of Boustead Plantation Bhd and the takeover of UMW Holdings Bhd by Sime Darby Bhd,” he told FMT.
Extensions not an impediment
Based on data available from Bursa, at least 28 companies were successfully taken private over the last 10 years despite extension of the closing date for acceptance.
Imran said there are many reasons for corporate takeovers to succeed despite deadline extensions.
“One of the reasons could be the valuation or the offer price which is typically higher than a stock’s current and historical share price.
“Some of the previous takeover offers also allowed for investors to exit at an attractive price, which they may not get otherwise,” he said.
He said MIDF continues to recommend that investors accept GDA’s offer as the RM11 offer price reflects an +18% premium over its discounted cash flow-derived fair value of RM9.32.
“It also offers a substantial premium of +125% over the latest unaudited net asset per share of RM4.89 as of end-Q3 FY2024.”
He anticipates the takeover, if successful, will be positive for the airport operator and the country in general.
“MAHB is expected to undertake substantial capex, which is crucial to ensure that airports in Malaysia, especially the Kuala Lumpur International Airport, are able to maintain and improve their competitiveness.
“With the much-needed revitalisation, it will have a long-term benefit as it increases the potential for Malaysia to be a hub via enhancing passenger experiences. Immediate spillover effect will be the enhancement of Malaysia’s tourism industry,” he said.
Imran said there could be other spillover effects such as the construction industry that will be required to fulfil the infrastructure works, and which has a large multiplier effect on the economy.
GDA’s privatisation bid has encountered some potholes along the way. Five of MAHB’s independent directors have advised shareholders to reject the takeover offer, arguing that the offer undervalues the airport operator.
Independent adviser Hong Leong Investment Bank (HLIB) has recommended shareholders to accept the offer, which it describes as reasonable.
It cited MAHB’s long-standing depressed share price, even though the offer fell below its independent valuation range of RM12.61 to RM13.71 per share.
In the event of a successful bid, GDA will wholly own MAHB and will delist the group.
Khazanah will hold a 40% stake in the consortium while EPF will hold 30%. GIP will have an effective 25% stake via its 83.3% stake in a joint venture with Abu Dhabi Investment Authority, which will have a 5% effective stake.
MAHB closed at RM10.90 today, giving it a market capitalisation of RM18.19 billion.