PETALING JAYA: The mutual termination of merger negotiations between MISC Bhd
and Bumi Armada Bhd is not viewed negatively by analysts despite uncertainty about the direction of the companies.
MBSB Research said the end of the process had left management of both companies to pursue respective growth opportunities while retaining strategic autonomy.
“We noted that MISC will retain full control of its offshore business strategy and pursue its growth plans without the complexity of an all-share transaction. This spared the group from potential shareholder dilution and integration costs due to the large-scale merger.
“As for Bumi Armada, this change allows the group to continue its independency on top of its strong order book,” the research house stated in a report following the announcement on Monday.
In separate filings with the stock exchange on Monday, both companies announced they had mutually agreed not to proceed with their proposed merger, as the memorandum of understanding – inked on Nov 14 last year – between the two groups is set to lapse next Thursday.
The non-binding share-based transaction had aimed to combine MISC’s offshore business with Bumi Armada to create a leading Malaysian-based floating production storage and offloading entity.
The research house said the failed talks suggested that MISC might be missing a growth opportunity, while Bumi Armada might lose synergy and access to extensive resources for the combined fleets.
“Nevertheless, we are looking at the bright side of this termination.
“For both MISC and Bumi Armada, we believe the potential merger may not be aligning to each other’s long-term strategic objectives and will now focus on their own growth opportunities,” MBSB Research added.
