PETRONAS has raised its offer for MISC shares by 3.8% to MYR5.50. Although still below our revised SOP FV of MYR5.88, we think there is a high chance of its largest minority shareholders accepting this revised price. We advise minority shareholders to accept the MYR5.50 offer, which is our new FV. For now, we downgrade the stock to NEUTRAL. There may be exciting times may ahead when MISC or its business units relist and raise funds again as valuations improve.

Lifting offer to 20 sen higher to MYR5.50. Petronas has upped the offer for the remaining stake it does not own in MISC by 3.8% from MYR5.30 to MYR5.50 per share cash. This follows complaints from several minority shareholders that its prior offer was low. The higher cash offer of MYR5.50 per share will raise the total buyout amount by MYR334m from MYR8.83bn to MYR9.164bn. Investors have until 5pm in 19 April to accept or reject this revised offer.

7.58% shareholders have accepted first offer. MISC’s two largest minority shareholders are the Employees Provident Fund (EPF) – which owns a 9.5% stake – and Permodalan Nasional Berhad (PNB), which has a 6.3% stake. As of market close last Friday, 7.588% of MISC’s shareholders had accepted MYR5.30 per share offer. This leaves only 19.75% of shareholding in the company for the offer to reach the 90% acceptance required for it to become unconditional.

What’s next? We foresee a restructuring of the MISC group after the group is taken private, which may potentially see its business entities being listed separately eventually. This may facilitate fund-raising on the back of improved valuations. We foresee such fund-raising mainly centred on expansion of the group’s LNG vessels fleet for the Gladstone and Progress Energy ventures. We also do not rule out the potential entry of new shareholders, which are likely to be the partners in MISC’s new LNG ventures. The group’s petroleum and chemical tanker division is likely to remain in private hands until it becomes profitable.

Source: RHB