Axiata likely to reject Keppel, SPH's offer for M1: source

[SINGAPORE] Malaysia's Axiata Group Bhd, the largest shareholder in Singapore-listed M1 Limited, is likely to reject an offer led by conglomerate Keppel Corp to acquire M1, a source with direct knowledge of the matter said on Thursday.

Axiata views the S$2.06 per share offer as "opportunistic" and "inadequate", said the source. Meanwhile, Axiata has said that it will continue to evaluate all options available for its stake in M1.

Keppel and Singapore Press Holdings Ltd (SPH) are offering to buy the remaining shares in M1, Singapore's third-largest mobile network operator, that they do not already own, in a deal worth up to about S$1.27 billion.

The two firms are seeking to gain majority control of M1 through the deal.

Axiata, which has a 28.3 per cent stake in M1, is also in talks to team up with private equity firms and other companies as it considers options to launch its own offer for a bigger stake in M1, the source said.

Keppel Corp, through its unit Keppel Telecommunications & Transportation Ltd (Keppel T&T), media firm SPH and their related parties have a total stake of 33.27 per cent in M1.

In 2017, the three major shareholders conducted a strategic review of their M1 stakes, but sources said it was dropped due to a lower-than-expected offer from external parties.

KGI Securities analyst Joel Ng said the Keppel-SPH offer appears aimed at minority shareholders, but he added it was possible they would raise the offer price to get Axiata's support.

Keppel and SPH are offering a 26 per cent premium to M1's last closing share price of S$1.63 on Friday.

"Through majority control, we would, together with SPH, be better able to support M1's management to drive changes and create greater value in the company," Loh Chin Hua, CEO of Keppel Corp, said in a statement.

The offer is subject to conditions, including approval from Singapore's Info-communications Media Development Authority on or before March 27, 2019.

Competition in mobile telecommunications is heating up in Singapore, with Australia's TPG Telecom planning to launch services after winning a license to become the city-state's fourth telecom operator. M1 is considered to be the most vulnerable to new competition, according to analysts.

Separately, Keppel said it was seeking to privatise Keppel T&T for S$1.91 per share, a 40 per cent premium to the stock's last closing price.

It already owns a 79.22 stake in Keppel T&T, which provides logistics and data centre services.

Trading in shares of Keppel, Keppel T&T, SPH and M1 was halted ahead of the announcements.

DBS Bank is the financial adviser to Keppel, while Credit Suisse (Singapore) is advising SPH. SPH owns The Business Times.

REUTERS