MISC; Do Not Accept Offer
Offer price: RM5.50; MISC MK

MISC announced that EPF has accepted Petronas’ takeover offer of RM5.50/share (revised up from RM5.30 on 5 April). EPF is MISC’s largest minority shareholder with a 9.5% stake. The offer expires on 19 April 2013. This brings Petronas’ total stake in MISC to 79.77%, as at 5pm 11 April 2013, from 62.67% preoffer.

The offer is conditional upon Petronas securing 90% or more of MISC shares. To trigger compulsory acquisition, Petronas needs to secure 96.3% of MISC. Other large minority shareholders include Skim Amanah Saham Bumiputera, Lembaga Tabung Haji, and KWAP.

In our view, the offer undervalues the Group’s assets and prospects. We recommend minority shareholders not to accept the offer. However, EPF’s acceptance has increased the likelihood of Petronas securing 90% of MISC. In the event scenario B (shown below) materializes, remaining dissenting minorities have the right to require Petronas to acquire their shares at terms and price similar to the offer.

Source: HwangDBS Research - 12 Apr 2013