DRB-HICOM bidding for POS

DRB-HICOM sees efficiency in Pos tie-up

DRB-HICOM Bhd, which has put in a bid for Khazanah Nasional Bhd's 32% stake in Pos Malaysia Bhd, sees potential efficiency gains in the partnership, said sources.

The company, which has several concessions such as Alam Flora, Puspakom, Hicom Power and KL Airport Services, was also comfortable and familiar with operating units that had the Government's golden share, added sources.

StarBiz reported in October that the planned divestment by Khazanah was taking longer than expected due to negotiations surrounding the Government's golden share in Pos Malaysia. Golden shares are typically held by the Government, giving it veto power in major decisions of the company.

In a report issued yesterday, OSK Research Sdn Bhd said Tan Sri Syed Mokhtar Albukhary was rumoured to be the frontrunner in the 32% stake sale, with the deal costing some RM700mil.

When contacted by StarBizWeek, Khazanah said it did not comment on market speculation. DRB-HICOM owns 70% of Bank Muamalat while the balance is held by Khazanah.

OSK Research said Syed Mokhtar was the potential suitor for Khazanah's divestment in Pos Malaysia, given that he was also a major shareholder of DRB-HICOM (under a private vehicle, Etika Strategi Sdn Bhd).

This would be a strategic fit in turning around Bank Muamalat and expanding the Islamic bank's presence by leveraging on Pos Malaysia's wide network of more than 1,000 post offices nationwide, comprising over 350 mini post offices and 224 independent postal agents, it said.

Bank Muamalat Malaysia Bhd chief executive officer Datuk Mohd Redza Shah Abdul Wahid told StarBizWeek it had not considered a strategic partnership with Pos Malaysia.

OSK added that the strategic partnership could transform Pos Malaysia into a success story and was also in line with Malaysia's objective to transform the country into an Islamic banking hub.

The deal, valued at RM700mil, works out to be RM4.05 per share, representing a 21% premium over its current share price of RM3.35 but lower than OSK's target of RM4.33.

We see this as a lucrative deal for Syed Mokhtar, given the upside potential once the Postal Land Act is revised, it adds.

OSK said that its valuation of Pos Malaysia did not include the revaluation of land bank should there be a relaxation in the use of these parcels under the proposed amendments of the Act, which is to be tabled in parliament this month.

If the revision is favourable in terms of land bank usage, OSK said Pos Malaysia could be valued as much as RM4.98 per share at three times book value of the land bank.

It would be a smart move on Syed Mokthar's part to acquire Khazanah's divestment before the parliament votes on the proposed amendments, the outcome of which we believe would be favourable, OSK added. - By JEEVA ARULAMPALAM