THE extraordinary general meeting of PLUS Expressways Bhd (PLUS) tomorrow looks set to be a 'done deal' with minorities expected to vote in favour of the bid by UEM Group Bhd and the Employees Provident Fund (EPF) to acquire all its assets and liabilities.

Analysts and bankers have repeatedly said that the price of RM4.60 is reasonable and urged shareholders to accept the offer.

Minorities such as Kumpulan Wang Persaraan (KWAP), Lembaga Tabung Haji and Permodalan Nasional Bhd are likely to vote in favour of the offer.

The decision to privatise PLUS was made by Prime Minister Datuk Seri Najib Tun Razak when he unveiled the 2011 national budget last year where he also announced the freezing of toll hikes at four highways owned by PLUS over the next five years.

The government's move is to pave the way for a reduction in toll rates and this may consequently affect the level of profitability that PLUS used to enjoy in the past.

Industry watchers say that the government appears to be undoing the old economic models -- with no compensation paid to concessionaires and freezing toll hikes in exchange for the lengthening of concession periods.

Previously, the government had compensated operators in cash and subsequently extended their concession periods in exchange for holding on to their existing toll rates.

Industry watchers say that the previous model was not sustainable in the long-run due to the tightening of fiscal policy.

They add that the re-negotiation of the concession with PLUS is a trail blazer for the government, which has also started to re-negotiate with other toll concessionaires, to lighten the burden on motorists.

Last Friday, the toll at the Petaling Jaya Selatan 2 (PJS2) toll plaza along the New Pantai Expressway (NPE) near Kampung Medan in Petaling Jaya, was reduced to RM1 from RM1.60 previously.

Meanwhile, MTD Capital has proposed a toll freeze on two of its highways without compensation. The toll concession on a third highway belonging to MTD will be abolished in May, ahead of expiry in 2018.

With the government bent on redressing toll concessions that are seen as lop-sided, especially to the government and consumers, the question uppermost on the minds of minority shareholders of PLUS, is whether the offer price of RM4.60 is reflective of the fundamentals of the stock.

Numerous analysts and investment houses have urged minority shareholders to 'cash-out' as the offer price of RM4.60 would see them exiting with handsome gains.

Analyst Hoy Ken Mak of AmResarch says the offer of RM4.60 is deemed fair as it is below the fair value of RM4.72.

Hoy adds that PLUS is an excellent trading stock but cautions that yields of 4.0 to 5.0 per cent are no longer promising and its contributions from overseas ventures may not be significant.

Bernard Ching of ECM Libra advises investors to take profits on continued uncertainty of the takeover, the long gestation period to complete the exercise and opportunity cost amidst the current market rally.

On the technicals of the share price, the chief technical analyst at Affin Bank, Dr Nazri Khan, said the offer price of PLUS is reasonable, adding that shareholders are likely to garner about 30 to 40 per cent in premium.

PLUS announced in October 2010 that it had received a joint-offer from major shareholders, UEM Group and EPF, to acquire all the business undertakings assets and liabilities of the group at a purchase consideration of RM23 billion or RM4.60 per share.

Both parties will then form a Special Purpose Vehicle (SPV) that is to be formed between UEM Group and EPF to facilitate the deal on 51:49 basis.

Thereafter, all the assets and liabilities of PLUS Expressways Bhd, will be transferred to the SPV.

As interested parties in the transactions, Khazanah Nasional, UEM Group and EPF will not be able to vote on the joint-offer as they hold 67.5 per cent of the shares in total.

The deal will pass if the simple majority of the remaining 32.55 per cent of shareholders vote in favour of it. - BERNAMA