OSK Research believes Berjaya Sports Toto's (BToto) potential privatisation is essentially aimed at collapsing the current ownership structure of the company.
It said via the exercise, Berjaya Corp Bhd can then have a larger direct stake in BToto, compared with its current indirect stake of only 25% via its 56.3% shareholding in Berjaya Land Corp Bhd (BLand), which in turns owns 45% of BToto.
The group announced on Thursday, Dec 23 that there have been preliminary discussions within the company on a possible corporate exercise which may result in the entry of a strategic investor.
While there has been initial contact with several potential strategic investors, no negotiations have been conducted with any strategic investor at this juncture as internal discussions and planning were still ongoing.
"We postulate that BToto can take a route similar to that for the privatisation of Magnum in 2007 via a selective capital reduction and repayment mode.
"And finally, a special purpose vehicle (SPV) that will be jointly owned by Berjaya and a new strategic investor will acquire the assets and liabilities of BToto once the privatisation is completed," OSK said in a statement on Friday.
The research house said the possible mode of the corporate exercise could be via a bonus issue, selective capital reduction, selective capital repayment and disposal of BToto to a SPV.
It maintains a "buy" call for the group at a target price of RM4.65. — Bernama
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