By Lawrence Yong
Malaysia’s state controlled oil company Petronas may increase its offer for MISC, after an offer at RM5.30 a share to all minority shareholders of the oil major’s shipping arm was flatly rejected last month.
Sources said that the Employees Provident Fund (EPF), which owns a 9.5 percent stake in MISC, had indicated to Petronas that it wanted a higher price for it to accept the Petronas offer.
Industry sources say that Petronas and the pension fund would likely come to an agreement soon, as both were government-linked agencies. Sources close to EPF had indicated that Malaysia’s biggest equity investor, may settle with Petronas at above RM6 per share for MISC.
A Petronas official declined to comment when contacted.
Some analysts had earlier pegged MISC’s fair value at RM6-RM6.50 a share based on future prospects. The previously loss-making shipping company had made a turnaround after cutting its container business and refocused on shipping liquefied natural gas (LNG) and floating oil storage business.
A EPF-Petronas deal would pave the way for delisting MISC and taking it private.
According to CIMB Investment Bank, principal advisor to Petronas for the takeover, Petronas may have secured as much as 65 percent stake of MISC’s total 4,463.8 million issued shares capital. According to last filing to Bursa Malaysia on March 26, EPF and its nominees still held a direct interest of 426 million shares in MISC.
CIMB said last month that up until March 15, Petronas had secured less than 1 percent more of MISC shares at RM5.30. Another 2.28 percent of shareholders may accept but was then unverified. Petronas, through CIMB, had extended the offer which is now valued at about RM8.65 billion until April 5, at the same price of RM 5.30 a share.
EPF, along with other minority shareholders of MISC had previously said that the offer price was too low.
AMInvestment Bank, which acted as an independent advisor on the deal, last month however recommended minority shareholders to take the offer. The bank painted a negative outlook for the shipping company’s future earnings and said that the offer was “not fair” because it was a discount to sum of parts value but that it was “reasonable” because it was higher than market price and there were no competing buyers to Petronas.
MISC’s share price has rallied above RM5.30 from March 18. On Monday, it was trading flat at RM5.37. MISC shares have gained about 25 percent since the start of this year.
Shamsul Azhar Abbas
The other major investors in MISC include Permodalan Nasional Berhad which holds a six percent stake through its various unit trusts. Analysts said that if both PNB and EPF reject Petronas’ offer, the takeover attempt will fail as Petronas would not be able to secure up to 90 percent of MISC shares, a condition for the offer. Also, above that level, MISC can be delisted.
According to MISC’s website, other shareholders such as Penang Development Corp, Felda, State Financial Secretary of Sarawak and Lembaga Tabung Haji holds only 1-2 percent of MISC shares each.
Petronas has taken a tough stance as they believe they are the major backer of MISC, analysts said. Petronas chairman and CEO Shamsul Azhar Abbas told a press conference in February that if minority shareholders do not accept the offer, MISC shares may suffer a slump.
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