KUALA LUMPUR: MMC Corp Bhd’s shares surged in early trade Friday after its major shareholder proposed to take it private at RM2 per share.
The conglomerate jumped 30%, or 39 sen to RM1.69, its highest since May 2018.
Tan Sri Syed Mokhtar Albukhary has made an offer to take MMC Corp private via a selective capital reduction and repayment (SCR) exercise.
Under the proposed deal, minority shareholders in MMC Corp will receive RM2.94bil cash, or RM2 per share.
Syed Mokhtar’s vehicle Seaport Terminal (Johore) Sdn Bhd (STJ), which owns 51.76% or 1.58 billion shares in MMC, announced that it would be conducting the exercise for the 1.47 billion shares or 48.24% stake it does not own in the company.
The proposed SCR provides an opportunity for minority shareholders to exit the company at a substantial premium to prevailing market price, STJ said.
MIDF Research said STJ’s offer to privatise MMC Corp via SCR and repayment exercise at RM2 a share is fair.
“The offer price is RM2 for each MMC share. This translates to an implied valuation of circa RM6.09bil, with an implied price-to-earnings ratio (PER) of 16.7 times.
“For comparison, MMC’s current market cap is at RM3.96il based on yesterday’s closing price. STJ offer is valid for all other shareholders of MMC, representing approximately 48.24% share capital worth RM2.94bil.
“Based on our calculation, the offer price is 54% premium of the current market value of MMC,” MIDF said.
Kenanga Research said based on its FY21 estimates, the proposed acquisition PER works out to 16x with PBV of 0.6x, representing premiums to average historical 1-year forward PER of 10x and PBV of 0.4x, respectively.
“This deal offers shareholders a chance to exit MMC given the current challenging situation (i.e. Suez Canal incident’s ripple effect, lockdown in several countries, and uncertainty in its Engineering segment).
“Against our current target price of RM1.05, we deem the MGO price of RM2 per share is an attractive exit price,” It said.