KUALA LUMPUR: Billionaire T. Ananda Krishnan's Usaha Tegas Sdn Bhd, which controls 46.96% of Tanjong plc, has served a take-over on the power-gaming company at RM21.80 per share or for RM4.7 billion.
This is the second company which Ananda Khrishan is taking private this week. Earlier ,MEASAT Global Network Systems Sdn Bhd (MGNS) launched a takeover of MEASAT GLOBAL BHD [] to acquire all the ordinary shares of 78 sen each not already held by MGNS at RM4.20 per share.
Tanjong Capital Sdn Bhd (TCSB), a special purpose vehicle set up by Usaha Tegas, and its concert parties, said on Friday, July 30 that based on the offer price of RM21.80 per Tanjong share, Tanjong is valued at RM8.8 billion. The minorities' shares are valued at RM4.7 billion.
The consortium collectively holds 46.96% of the total shares in Tanjong. The consortium has given irrevocable undertakings to TCSB to accept the offer.
"The offer price represents a premium of 21.92% over the closing price of Tanjong shares of RM17.88 per share on July 27 -- this being the last traded price prior to the announcement by TCSB of the conditional take-over offer of Tanjong," TCSB said.
Based on the 12-month rolling earnings before interest, tax, depreciation and amortisation (EBITDA) up to Jan 31, 2010 of Tanjong, the offer price of RM21.80 per Tanjong a share represents an implied enterprise value over EBITDA of 8.0 times.
TCSB said Tanjong's subsidiaries are involved in the power generation, gaming, leisure and property investment. The Tanjong Group has ambitions of being a global player in the power generation industry, by pursuing development opportunities in the Middle East and North Africa, South and South East Asia regions.
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Tanjong as currently structured, will not have sufficient capacity to achieve these ambitions, and therefore will need to be restructured and recapitalised in order to meet the prospective long term investment and debt profile, which will result in higher borrowing costs and translate into medium term earnings volatility.
Additionally, TCSB said it believed that Tanjong which has a vast range of businesses including power and gaming, suffers from conglomerate discount valuation.
"Furthermore, Syariah-compliant and many Malaysia based institutional investors are not able to invest in the Tanjong Group's growing power assets, given the gaming business of the Tanjong Group.
"A privatised Tanjong will enable the business to seek out long-term capital providers, and where it serves the corporate objective, allow the introduction of strategic partners or undertaking of broader partnerships," it said.
TCSB said it was offering the minority shareholders of Tanjong the opportunity to exit at an attractive premium whilst not subjecting them to the associated risks of the company's next growth phase. The premium to be paid will represent a significant upfront cash yield to the shareholders.
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CIMB Investment Bank Berhad and RHB Investment Bank Berhad have been appointed as joint financial advisers, whilst Standard Chartered Bank and RBS Asia Advisers (Malaysia) Sdn Bhd have been appointed as joint international financial advisers, to TCSB for the Offer.
This is the second company which Ananda Khrishan is taking private this week. Earlier ,MEASAT Global Network Systems Sdn Bhd (MGNS) launched a takeover of MEASAT GLOBAL BHD [] to acquire all the ordinary shares of 78 sen each not already held by MGNS at RM4.20 per share.
Tanjong Capital Sdn Bhd (TCSB), a special purpose vehicle set up by Usaha Tegas, and its concert parties, said on Friday, July 30 that based on the offer price of RM21.80 per Tanjong share, Tanjong is valued at RM8.8 billion. The minorities' shares are valued at RM4.7 billion.
The consortium collectively holds 46.96% of the total shares in Tanjong. The consortium has given irrevocable undertakings to TCSB to accept the offer.
"The offer price represents a premium of 21.92% over the closing price of Tanjong shares of RM17.88 per share on July 27 -- this being the last traded price prior to the announcement by TCSB of the conditional take-over offer of Tanjong," TCSB said.
Based on the 12-month rolling earnings before interest, tax, depreciation and amortisation (EBITDA) up to Jan 31, 2010 of Tanjong, the offer price of RM21.80 per Tanjong a share represents an implied enterprise value over EBITDA of 8.0 times.
TCSB said Tanjong's subsidiaries are involved in the power generation, gaming, leisure and property investment. The Tanjong Group has ambitions of being a global player in the power generation industry, by pursuing development opportunities in the Middle East and North Africa, South and South East Asia regions.
''
Tanjong as currently structured, will not have sufficient capacity to achieve these ambitions, and therefore will need to be restructured and recapitalised in order to meet the prospective long term investment and debt profile, which will result in higher borrowing costs and translate into medium term earnings volatility.
Additionally, TCSB said it believed that Tanjong which has a vast range of businesses including power and gaming, suffers from conglomerate discount valuation.
"Furthermore, Syariah-compliant and many Malaysia based institutional investors are not able to invest in the Tanjong Group's growing power assets, given the gaming business of the Tanjong Group.
"A privatised Tanjong will enable the business to seek out long-term capital providers, and where it serves the corporate objective, allow the introduction of strategic partners or undertaking of broader partnerships," it said.
TCSB said it was offering the minority shareholders of Tanjong the opportunity to exit at an attractive premium whilst not subjecting them to the associated risks of the company's next growth phase. The premium to be paid will represent a significant upfront cash yield to the shareholders.
''
CIMB Investment Bank Berhad and RHB Investment Bank Berhad have been appointed as joint financial advisers, whilst Standard Chartered Bank and RBS Asia Advisers (Malaysia) Sdn Bhd have been appointed as joint international financial advisers, to TCSB for the Offer.
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