(Jan 11, RM4.45)
Recommend “hold” (from “buy”) at RM4.69 with target price of RM4.70: MMC Corp Bhd did not throw in a new bid for PLUS as speculated. Jelas Ulung Sdn Bhd did not put in a RM50 million cash deposit, which means that it is out of the race. All eyes will now be back on UEM-EPF, which is the lone “bidder”. The offer implies RM4.60 per PLUS share.
PLUS is now officially a “hold”; our call has been put under review since its share price started trending close to the UEM-EPF offer price. UEM-EPF’s offer is fair and close to our RM4.70-discounted cash flow-derived target price.
PLUS said that it did not receive any new offers as at 5 pm on Monday, being the final deadline for potential offers for PLUS’ businesses.
Also, only UEM-EPF has remitted the RM50 million cash deposit and submitted a letter from their financiers with regards to its financial ability to undertake and complete the proposed acquisition of PLUS.
The cash deposit and unconditional written confirmation on the financial ability of the offerer to complete the acquisition of PLUS’ businesses are requirements for the offer to be considered by PLUS’ board of directors. As Jelas Ulung did not meet the conditions, it would imply that it is now out of the race. Business Times reported that Jelas Ulung cited a “lack of clarity” for its failure to meet the conditions. Hence, UEM-EPF’s RM23 billion offer is the only one left.
PLUS’ EGM held on Dec 23, originally to vote on UEM-EPF’s RM23 billion offer, was adjourned following Jelas Ulung’s 11th hour RM26 billion attempt.
PLUS’ directors will now have to call for another EGM to approve the sale of PLUS’ businesses to UEM-EPF. The deal’s completion is still contingent upon the successful restructuring of PLUS’ toll concessions, expected to be completed in 4Q11. We advise shareholders to vote for the deal.
The decision on PLUS’ sale to UEM-EPF will hinge on minorities holding 32.52% of PLUS, of which 10.6% are foreigners. Khazanah-UEM-EPF, which hold a combined 67.48%, cannot vote.
The number of votes required to take the deal through will have to come from minorities holding 16.27% of PLUS (50%+1 share).
The votes of two existing substantial shareholders: Kumpulan Wang Amanah Pencen (who holds 5.05% of PLUS), and Permodalan Nasional Bhd (and its related funds, 8.55%), are crucial. — Maybank Investment Bank Research, Jan 11
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