Showing posts with label merger and acquisition. Show all posts
Showing posts with label merger and acquisition. Show all posts
Friday 13 November 2009
Media Prima revises upwards offer for NSTP
Media Prima revises upwards offer for NSTP
Published: 2009/11/13
Media Prima says it proposes to increase the offer price of each NSTP share to RM2.40 from RM2 previously offered.
Media Prima Bhd (MPB) (4502) yesterday revised upwards its takeover offer for The New Straits Times Press (M) Bhd (NSTP).
MPB, which holds a 43 per cent interest in NSTP's equity, wants to buy all shares not owned by it in the newspaper company and later take it private. The takeover will be done through a share exchange.
Through CIMB Investment Bank Bhd yesterday, MPB announced its proposal to increase the offer price of each NSTP share to RM2.40 from RM2 previously offered.
Consequently, it proposed to revise the exchange ratio to six new MPB shares for every five offer shares accepted and one new MPB warrant free for every five offer shares accepted.
(6 new MPB share + 1 new MPB free warrant = 5 NSTP shares)
In its earlier offer, MPB offered an exchange ratio of one new MPB share for every one offer share and one new MPB warrant for every five offer shares.
(5 new MPB share + 1 new MPB warrant = 5 NSTP share)
MPB said its board thinks the higher exchange ratio is justified to improve attractiveness of the offer while not detrimental to interest of its existing shareholders. It said the revision was done after considering views of various stakeholders of NSTP and the prevailing market sentiment.
"The revised offer is attractive and fair as the revised exchange ratio represents a 10 per cent premium over the average market price of NSTP shares for the last month and a 33 per cent premium over the average market price in the same period based on absolute price.
"This revised offer reinforces MPB's belief of the greater benefits to be gained and synergies that can be crystallised by the enlarged group post completion of the transaction," MPB's group managing director Datuk Amrin Awaluddin said.
Separately, NSTP yesterday declared a special tax-exempt special dividend of 40 sen for every share held as at November 26 2009.
"We view positively NSTP's declaration of the special dividend as it is consistent with MPB's practice of returning excess capital to its shareholders.
"Our intention of returning the entire proceeds from the special dividend received from NSTP reiterates our commitment to continually enhance our shareholders' returns on their investment in the group," Amrin added.
The announcement will see NSTP paying out some RM86.9 million in dividends to shareholders. Its board said that the company has a substantial amount of retained earnings which can be rewarded to shareholders.
MPB said as an existing shareholder, it will be entitled to its portion of the special dividend amounting to around RM37.6 million.
It added that it intends to distribute to its own shareholders the entire amount of NSTP special dividend it will receive but said NSTP shareholders who accept its revised offer will not be entitled to the MPB special dividend.
NSTP shareholders who have accepted the original offer on November 5 2009 will however be entitled to receive the revised offer and also the NSTP special dividend.
http://www.btimes.com.my/Current_News/BTIMES/articles/mpb12-2/Article/index_html
Published: 2009/11/13
Media Prima says it proposes to increase the offer price of each NSTP share to RM2.40 from RM2 previously offered.
Media Prima Bhd (MPB) (4502) yesterday revised upwards its takeover offer for The New Straits Times Press (M) Bhd (NSTP).
MPB, which holds a 43 per cent interest in NSTP's equity, wants to buy all shares not owned by it in the newspaper company and later take it private. The takeover will be done through a share exchange.
Through CIMB Investment Bank Bhd yesterday, MPB announced its proposal to increase the offer price of each NSTP share to RM2.40 from RM2 previously offered.
Consequently, it proposed to revise the exchange ratio to six new MPB shares for every five offer shares accepted and one new MPB warrant free for every five offer shares accepted.
(6 new MPB share + 1 new MPB free warrant = 5 NSTP shares)
In its earlier offer, MPB offered an exchange ratio of one new MPB share for every one offer share and one new MPB warrant for every five offer shares.
(5 new MPB share + 1 new MPB warrant = 5 NSTP share)
MPB said its board thinks the higher exchange ratio is justified to improve attractiveness of the offer while not detrimental to interest of its existing shareholders. It said the revision was done after considering views of various stakeholders of NSTP and the prevailing market sentiment.
"The revised offer is attractive and fair as the revised exchange ratio represents a 10 per cent premium over the average market price of NSTP shares for the last month and a 33 per cent premium over the average market price in the same period based on absolute price.
"This revised offer reinforces MPB's belief of the greater benefits to be gained and synergies that can be crystallised by the enlarged group post completion of the transaction," MPB's group managing director Datuk Amrin Awaluddin said.
Separately, NSTP yesterday declared a special tax-exempt special dividend of 40 sen for every share held as at November 26 2009.
"We view positively NSTP's declaration of the special dividend as it is consistent with MPB's practice of returning excess capital to its shareholders.
"Our intention of returning the entire proceeds from the special dividend received from NSTP reiterates our commitment to continually enhance our shareholders' returns on their investment in the group," Amrin added.
The announcement will see NSTP paying out some RM86.9 million in dividends to shareholders. Its board said that the company has a substantial amount of retained earnings which can be rewarded to shareholders.
MPB said as an existing shareholder, it will be entitled to its portion of the special dividend amounting to around RM37.6 million.
It added that it intends to distribute to its own shareholders the entire amount of NSTP special dividend it will receive but said NSTP shareholders who accept its revised offer will not be entitled to the MPB special dividend.
NSTP shareholders who have accepted the original offer on November 5 2009 will however be entitled to receive the revised offer and also the NSTP special dividend.
http://www.btimes.com.my/Current_News/BTIMES/articles/mpb12-2/Article/index_html
Wednesday 20 May 2009
How to Tell Good Growth from Bad Growth
How to Tell Good Growth from Bad Growth
All top-line growth is not created equal. History has shown that most mergers and acquisitions do little to help the long-term health and revenue growth of an organization. Growth that uses capital inefficiently is not the way to go.
How can you tell good growth from bad?
How good growth builds value
Growth of any kind increases revenues. Good growth not only increases revenues but correspondingly improves profits and is sustainable over time. It is primarily organic (internally) generated from the ongoing operations and business of the company and is based on differentiated products and services that meet new or previously unmet consumer needs.
Good growth is thus growth that is profitable, organic, differentiated, and sustainable (PODS). Good growth builds shareholder value over time. In contrast, bad growth destroys shareholder value.
Mergers and acquisitions, a primary example of bad growth, are often based on myopic visions of synergy that have no basis in the reality fo the market place. Instead of 4 plus 4 equaling 10, as promised when the deals are announced, more often than not 4 plus 4 winds up equaling 5 or 6. It is true that a large number of mergers and mega-acquisitions result in one-shot cost synergies - usually cost savings from the elimination of duplication with the merged enterprise - but seldom in an improved rate of revenue growth that is sustainable for the long run.
Compared with growing through a string of major acquisitions, good growth offers better returns over time, is less risky, and saves companies from crippling high debt and cash crises such as those faced by Vivendi and AOL Time Warner.
Vivendi acquired (among other things) Universal Studios, Blizzard Entertainment, and Def Jam. The problem? Vivendi overpaid and used debt to pay for most of those high-priced acquisitions. While the companies it bought were making money, Vivendi as a whole plunged into the red, after taking into account the repayment of interest on the billions of dollars it borrowed. The financial condition of the company became so acute that many wondered if it would survive.
Of course, not all acquisitions are bad. There are times when scale (i.e., your overall size in relation to competitors) matters and it can be impossible to compete against industry giants without it.
Phillips and Conoco were both relatively small fish in the energy market. They were both growing but they were at a huge competitive disadvantage versus ExxonMobil or BP. The Conoco-Phillips merger in 2002 (the new company is called ConocoPhillips) took out costs, and the integration of the two companies has been extremely successful. They have built on each other's strengths.
Similarly, there are times when an industry goes through a consolidation wave. At those moments, you either get bigger or find yourself at a disadvantage.
But, overall, organic growth remains the way to go. It results in a better price-earnings ratio so that when an industry undergoes consolidation, this strength provides a company with the upper hand in making appropriate acquisitions against its competition. The end result is a company with additional scale and scope and greater credibility to go to the next level.
All top-line growth is not created equal. History has shown that most mergers and acquisitions do little to help the long-term health and revenue growth of an organization. Growth that uses capital inefficiently is not the way to go.
How can you tell good growth from bad?
How good growth builds value
Growth of any kind increases revenues. Good growth not only increases revenues but correspondingly improves profits and is sustainable over time. It is primarily organic (internally) generated from the ongoing operations and business of the company and is based on differentiated products and services that meet new or previously unmet consumer needs.
Good growth is thus growth that is profitable, organic, differentiated, and sustainable (PODS). Good growth builds shareholder value over time. In contrast, bad growth destroys shareholder value.
Mergers and acquisitions, a primary example of bad growth, are often based on myopic visions of synergy that have no basis in the reality fo the market place. Instead of 4 plus 4 equaling 10, as promised when the deals are announced, more often than not 4 plus 4 winds up equaling 5 or 6. It is true that a large number of mergers and mega-acquisitions result in one-shot cost synergies - usually cost savings from the elimination of duplication with the merged enterprise - but seldom in an improved rate of revenue growth that is sustainable for the long run.
Compared with growing through a string of major acquisitions, good growth offers better returns over time, is less risky, and saves companies from crippling high debt and cash crises such as those faced by Vivendi and AOL Time Warner.
Vivendi acquired (among other things) Universal Studios, Blizzard Entertainment, and Def Jam. The problem? Vivendi overpaid and used debt to pay for most of those high-priced acquisitions. While the companies it bought were making money, Vivendi as a whole plunged into the red, after taking into account the repayment of interest on the billions of dollars it borrowed. The financial condition of the company became so acute that many wondered if it would survive.
Of course, not all acquisitions are bad. There are times when scale (i.e., your overall size in relation to competitors) matters and it can be impossible to compete against industry giants without it.
Phillips and Conoco were both relatively small fish in the energy market. They were both growing but they were at a huge competitive disadvantage versus ExxonMobil or BP. The Conoco-Phillips merger in 2002 (the new company is called ConocoPhillips) took out costs, and the integration of the two companies has been extremely successful. They have built on each other's strengths.
Similarly, there are times when an industry goes through a consolidation wave. At those moments, you either get bigger or find yourself at a disadvantage.
But, overall, organic growth remains the way to go. It results in a better price-earnings ratio so that when an industry undergoes consolidation, this strength provides a company with the upper hand in making appropriate acquisitions against its competition. The end result is a company with additional scale and scope and greater credibility to go to the next level.
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