Mar 25, 2010

EPF to accept Astro at RM4.30? a commentary by TA securities

astro Star Biz reported that EPF may vote to accept the general offer of RM4.30 per Astro  All Asia Networks (AAAN) share, if the provident fund’s private equity division is offered a chance to invest in the unlisted Astro or parts of it. EPF declined to comment while Usaha Tegas Sdn Bhd (Ananda’s vehicle) has not replied to queries. EPF owns 8.61% of Astro. (The Star)

Comments:
From a purely economical standpoint, EPF’s acquisition price of Astro shares over the past year has been below the offered RM 4.30, therefore the disposal of their stake would result in a net gain to the fund. However, the prospects of buying into the private entity would also be attractive,  given the potential lucrative relisting, a la Maxis Communications. If EPF is interested  in the private Astro Holdings Berhad, they would have the negotiating power, only if the remaining 8.48% minority shareholders accept the offer (as 72.9% has accepted excluding EPF). This is because 90% of outstanding shares are needed in order for  the takeover deal to go through. However,
this equilibrium could change if EPF acquires more shares in the open market, a move that the fund has not taken so far. We maintain our target price at RM4.30 for AAAN. 
source: TA Securities