Malaysian tycoon Ananda Krishnan has announced another plan to take a company private -- this time launching a M$4.7 billion ($1.48 billion) offer to delist power producer Tanjong.
The offer is conditional upon Tanjong Capital, Krishnan’s holding company, cornering 90% of the shareholding of Tanjong. Krishnan already controls 47% of the shareholding of Tanjong through various holding companies, so he needs another 43%.
The offer, which was announced on Friday, has been launched at M$21.80 per share. Not surprisingly, Tanjong shares gained on Monday to reach almost the offer level. If it is successful, Tanjong shares will be delisted from both Bursa Malaysia and the London Stock Exchange where they currently trade.
Krishnan launched a high-profile privatisation of telecommunications firm Maxis Communications in June 2007, surprising investors. On that deal, he managed to keep his cards close to his chest -- which he is doing once again. Banks were called in only a few days before the offer for Tanjong was launched, said a source, and had to scramble to secure approvals to extend the financing required for the deal to progress.
Maxis was streamlined, some assets were carved out and the restructured company was then relisted at the end of last year in a $3.3 billion deal, which was Malaysia’s largest-ever initial public offering.
Some specialists expect that Krishnan has a similar game plan for Tanjong. In addition to the power business, Tanjong also has a gaming business. The profile of both businesses is different, so sources of financing for both businesses are not the same and neither is the revenue profile. Tanjong has said the privatisation is driven by the need to invest substantially to grow the portfolio of power generation assets it owns.
This year Krishnan has launched other take-private offers for private satellite service provider Measat Global and pay television company Astro All Asia Networks.
Some analysts commented that the pricing of the Tanjong offer, at a 22% premium over the last traded price and 13 times forward earnings was fair and shareholders should accept the offer. The offer price of M$21.80 is higher than Tanjong shares have traded during the last 10 years.
The deal is being led by Royal Bank of Scotland and Standard Chartered Bank, alongside local firms CIMB Investment Bank and RHB Investment Bank. MIMB Investment Bank and J.P. Morgan have managed to secure roles as independent financial advisers to the Tanjong board. Cheong Kee Fong and Slaughter and May are providing legal advice.
As is becoming increasingly common in M&A deals, the advisers have all committed financing for the deal. All the advisers are sharing equally in the financing, said a source.