Analysts had said Axiata would have to accept the offer unless it was able to find a partner to fund a counterbid since M1 was a non-core asset. The 28.67% stake comprises 265.41 million shares.
KUALA LUMPUR: Axiata Group Bhd
's exit from M1 Ltd for RM1.65bil to Konnectivity Pte Ltd will allow the group to make a profit and redeploy the capital to fund its capex.
In a research note on Monday, Affin Hwang Capital research said it is positive on the deal, which largely falls within its expectations.
"We maintain our HOLD rating on Axiata with an unchanged price target of RM3.63 based on a 25% discount to its SOP valuation," it said.
To recap, Axiata announced that it had accepted the voluntary conditional general offer by Konnectivity for its entire 28.7% stake in M1 with an estimated gains of RM126.5mil.
According to Affin Hwang, Axiata's investment in M1 had steadily contributed to Axiata's growth over years with dividends amounting to RM1.1bil in the last 10 years.
The group has made the decision to accept the offer due to the need for capital reallocation and new priorities in line with its vision to be the Next Generation Digital Champion by 2022 and the investments required to achieve that.
"Axiata also prefers not to be a minority investor in a potentially privatised company, making the investment illiquid," noted the research house.
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