PLUS-Quo Vadis?

This is Sharidan M. Ali's article in the online STAR. It tells about the latest goings-on in the PLUS takeover.

"As the final deadline of Jan 10 looms closer for PLUS Expressways Bhd to receive takeover offers, it seems almost certain that there will be only two.

One is a joint offer by UEM Group Bhd and the Employees Provident Fund (EPF), while the other is from little-known Jelas Ulung Sdn Bhd.

The new deadline is also for all offers to comply with several conditions to acquire PLUS’ businesses, such as coming up with a refundable RM50mil cash deposit and an unconditional written confirmation that the offeror has the financial ability to undertake the transaction and disclose more information about the bid, including the
funding source.

It is believed, however, that Jelas Ulung will have no problems complying with these conditions, including forking out the deposit, as it has already secured the credit to do so.

Jelas Ulung is a vehicle of Tan Sri Ibrahim Mohd Zain, who had earlier stated that he had secured the funding for the acquisition which had been arranged by a subsidiary of the Bank of China. “He appears to have secured the funding. So the company can comply with those conditions imposed by PLUS board. If that’s truly the case, then there’s little reason for the board not to recommend a premium bid for shareholders to vote on,” said a source.

This means that the independent directors of PLUS will have to deliberate on the two offers and decide which one to recommend to shareholders to vote at a yet-to-be-scheduled shareholders meeting.

UEM and EPF have offered to acquire the assets and liabilities of PLUS for RM23bil, which works out to RM4.60 per share, while Jelas Ulung’s offer is at a premium of RM26bil or RM5.20 per share.

For the acquisition via the asset-liability route, only a simple majority (50% plus one share) from PLUS shareholders at an EGM is sufficient for the deal to pull through.

An online news portal recently reported that PLUS was currently in the process of seeking clarification from the Securities Commission on whether UEM and EPF would be allowed to vote on Jelas Ulung’s offer in the event the competing bid was tabled to shareholders.

But a source said the report was not accurate, reiterating that Khazanal Nasional Bhd-UEM and EPF, as shareholders, would have the right to vote on Jelas Ulung’s offer at a shareholders meeting. However, the parties, which hold a combined 67.48% stake in the highway operator, will abstain from voting on their own takeover offer.

This means that the decision will hinge on minority shareholders holding 32.52% of PLUS of which 10.6% are foreigners (as at September 2010).

The remaining votes also belong to two other substantial shareholders – Retirement Fund Inc (KWAP) which holds 5.05% of PLUS and Perbadanan Nasional Bhd (and its related funds) of 8.55%.

Analysts said based on the offer price, Jelas Ulung’s proposal clearly looked more appealing.

“But, then again, it would be up to the shareholders to vote. In this instance, that includes UEM and EPF which also have a competing offer for PLUS on the table,” they said.

To recap, PLUS had on Oct 15, 2010, received an offer from UEM-EPF to acquire all its businesses and undertakings, including assets and liabilities, for RM23bil where UEM-EPF would incorporate a special-purpose vehicle for the acquisition, in which UEM and EPF would hold 51% and 49% equity interest respectively.

In mid-December, three days before the PLUS EGM to vote on the proposed acquisition, Jelas Ulung swooped in with its offer."

So, how will this bidding game be panning out?. Is it strictly economics or will the political hand wins the day?

This, we will see.