PETALING JAYA: The New Straits Times Press (M) Bhd (NSTP) and Utusan Melayu (M) Bhd are still in merger talks but “have yet to reach a definitive agreement in relation to the terms of such merger.”
In a joint statement to Bursa Malaysia yesterday, they said their boards of directors had been “exploring ways to enhance the value of both groups via a possible merger.”
“Utusan and NSTP intend to continue to explore and discuss this matter further and have entered into a non-disclosure agreement to govern the period of discussion,” the companies said.
They added that they would make an announcement to the exchange immediately should “a final agreement” materialise.
Trading in both companies’ shares was suspended last Friday pending an announcement, but the press conference scheduled for yesterday afternoon was called off in the morning.
According to a joint statement issued by NSTP and Utusan to the press in the morning, “the press conference scheduled for today (Monday) has been postponed until further notice.”
In a subsequent filing to Bursa, the companies said their respective shares would resume trading today.
The Bahasa Melayu newspapers published by NSTP are Berita Harian, Berita Minggu, Harian Metro and Metro Ahad while Utusan publishes Utusan Malaysia, Kosmo, Mingguan Malaysia and Utusan Melayu Mingguan.
Berita Minggu, Metro Ahad and Mingguan Malaysia are weekend papers while Utusan Melayu Mingguan is the only Jawi newspaper in the country.
The NSTP also prints two major English dailies – The New Straits Times and The Malay Mail.
A source told StarBiz that the talks would continue “until everyone gets what he wants from the merger.”
One of the main concerns was the independence of Utusan Malaysia as the Malays shared strong sentiment for the oldest Malay newspaper in the country, the source said, adding that more assurance would be given that the paper would continue to be published.
Another issue is the profitability of the Malay newspapers. Although they were targeted at the largest population in the country, their earnings fell below other mainstream dailies, the source added.
The corporate plan is believed to involve the sale of the assets of NSTP and Utusan to a newly set up company, following which NSTP and Utusan would be delisted while the new company is listed. NSTP and Utusan shareholders would be offered shares of the new entity or a cash payout.
Currently, Umno owns about 50.5% in Utusan via RHB Nominees (Tempatan) Sdn Bhd while the Finance Ministry holds some 6.9%.
Media Prima Bhd, on the other hand, is a substantial shareholder of NSTP with a 43.3% stake. Based on its 2005 annual report, Media Prima’s major shareholders are Gabungan Kesturi Sdn Bhd with 13.9% and Employees Provident Fund with about 12%.
If this planned structure took off, Umno would end up controlling all the major Malay newspapers in the country.
UOBKayHian said in a research note that the potential merger bode well for the companies. It noted that Utusan shares were trading at a “depressed valuation” – a price-to-earnings ratio of 9.4 times compared with the sector’s average of 21.3 times.
Furthermore, there would be potential cost savings from bulk purchasing of newsprint and consolidation of back-office operations, the brokerage added.