Mar 19, 2010

Astro - according to ECM Libra

Going off air
•  Cash offer price of RM4.30/share
Astro All Asia Networks (AAAN) announced that it received  a notice of conditional take-over offer from Astro Holdings Sdn Bhd  (AHSB) for a cash offer price of RM4.30/share. AHSB is owned by Usaha Tegas (58%), Khazanah Nasional (30%) and an array of bumiputera companies (12%). Usaha Tegas and Khazanah Nasional are currently the two largest shareholders of AAAN. AHSB obtained irrevocable undertakings to accept the offer from shareholders with 72.9% shareholding in AAAN.

Will not take much for offer to turn unconditional
The offer shall be conditional upon AHSB having received more than 90% of the voting shares in AAAN. Should EPF accept the offer, AHSB will need to receive another 9.7% of the voting shares for the offer to turn unconditional which we believe will not be difficult. The offer document will be posted within 21 days and the offer will close 21 days after the posting. AHSB does not intend to maintain AAAN’s listing status and AAAN does not plan to invite another party to make a competing bid.

•  Offer price appears attractive
The RM4.30 offer price is 21% higher than its last price and 6% higher than the IPO price for institutional investors of RM4.06. The last time, AAAN’s share price closed above RM4.30 was more than two and a half years ago on 18 Jul 2007 before its infamous fallout with the Lippo Group over PT Direct Vision in Aug 2007. The offer price is 14% above the consensus target price analysts have for AAAN of RM3.78 and  implies expensive P/E valuations of 36.8x FY10F and 32.8x FY11F (based on consensus estimates).  

  Offer likely to be well received
AHSB expects the privatisation to be completed by Jun 2010. It explains that the move will allow AAAN to focus on its overseas operations (20% shareholding in Sun Direct TV) which will still require heavy capital investments. It added that a relisting will be considered when AAAN achieves more stable earnings ala sister company, Maxis. We believe the offer will be well received.
astro-financial-analaysis

source: ECM Libra