UPDATED @ 06:58:00 AM 23-04-2011
By Lee Wei Lian
April 22, 2011
KUALA LUMPUR, April 22 — Tan Sri Syed Mokhtar Albukhary expanded his business empire today when it was announced that DRB-Hicom Bhd has won the bid to buy Khazanah Nasional’s 32.2 per cent stake in Pos Malaysia Berhad.
DRB Hicom is controlled by Syed Mokhtar who also controls a vast array of other businesses such as ports, including the nation’s second largest — the Port of Tanjung Pelepas — the nation’s largest independent power producer Malakoff Corp, water treatment plants, national rice supplier Bernas and the national gas distribution business via Gas Malaysia.
His flagship company MMC Corp is also involved in a joint venture with Gamuda to be the project manager for the KL MRT, touted as the nation’s largest ever construction project.
Khazanah’s managing director, Tan Sri Datuk Azman Haji Mokhtar, said in a media statement today that DRB-HICOM was chosen based on their overall bid, which offers not only a defined strategy but also an executable business plan and an acceptable offer price.
“Their proposed strategy and business plan in turn provides an effective platform for POS’s growth, if adopted by the Board of POS as a whole,” he said.
The divestment is made via a conditional offer with a price consideration of RM3.60 per share, or RM622.79 million.
Some analysts have expressed concern that Syed Mokhtar’s appetite for acquisitions make it appear as though he is “buying up the whole country.”
The Malaysian Insider also understands that Syed Mokhtar had earlier expressed interest in taking over more ports in the country, including in Kemaman, Penang, Kuantan, North Port and Tanjung Bruas.
Prior to winning the Pos Malaysia bid, Syed Mokhtar’s MMC Corp had also put in a failed bid for Plus Expressways Bhd which at the time, triggered concerns that the ownership of critical national infrastructure would be concentrated in the hands of a private businessman.
The tycoon’s growing empire, however, has come at a cost as his companies have racked up a total debt estimated at RM25 billion.
The debt levels have, however, been described by some analysts as still manageable due to the way they are structured.
DRB-Hicom’s offer price of RM3.60 per share is subject to the modification of the Special Rights Redeemable Preference Share in POS (“Special Share”) held by Minister of Finance Incorporated.
Khazanah said that the modification, among other things, includes the reservation to appoint up to two board members in POS and the removal of rights to appoint the Chairman and Managing Director of Pos and fix their respective remunerations such that these become matters for determination by the board of directors of Pos.
The conditional offer price is also subject to the variation in the use of 16 plots of identified lands owned by the Federal Lands Commissioner and leased to Pos.
The current terms of the lease allow for only postal services use, while the variation provides for the inclusion of commercial use, over and above the mandatory postal use.
Khazanah said that in the event the variation does not happen by 31 December 2011, DRB-Hicom will be refunded 10 sen per share, or RM17.30 million.
Khazanah said that the POS divestment is deemed a landmark divestment as it is Khazanah’s first divestment of its entire stake in a major GLC and that it had adopted a robust strategic divestment process, which involved an open bidding process and a merit-based and transparent selection procedure.
It added that it had appointed CIMB Investment Bank and McKinsey & Company as advisors for the transaction and revealed some details as to the tender process in its media statement.
Khazanah said that a total of 48 parties were approached to submit their respective proposals, out of which 10 parties expressed their interest to participate and were prequalified.
Four parties submitted binding bids whereby bidders submitted their bids in separate envelopes containing the strategy, the business plan and the offer price.
An independent evaluation panel comprising five senior professionals from the public and private sectors with extensive postal and corporate experience then evaluated all the bidders’ proposal on the basis of anonymity, where the bidders’ names were coded.
Two companies were then shortlisted and DRB-Hicom was unanimously selected by the Khazanah board based on a composite score — with strategy given a 60 per cent weightage and pricing 40 per cent.
http://www.themalaysianinsider.com/business/article/syed-mokhtars-drb-hicom-wins-pos-malaysia-bid/
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