Kuala Lumpur: Malaysian tycoon Ananda Krishnan plans to buy out the country’s largest mobile operator, Maxis Communications, the firm said on Monday, in a deal that could be worth at least $5 billion (Rs20,500 crore).
Maxis gave no reason for the buyout plan but industry analysts speculated that Krishnan, the Sri Lanka-born businessman who is the country’s second richest man after Robert Kuok (who controls the Shangri La chain of hotels), might want to relist Maxis offshore and raise foreign capital to fund international expansion.
Maxis, which faces a price war and a maturing market at home, is expanding into larger and less developed Asian markets such as India and Indonesia to drive growth.
“It is a surprise move,” said Cheah King Yoong, head of investment research at Malaysia’s SJ Securities. “But I would not be surprised if Maxis is listed overseas.”
Chong Tjen San, a telecom analyst at Malaysia’s Aseam bankers, said the buyout plan could be a first step towards raising money to fund major investments in India and Indonesia.
Maxis owns India’s Aircel and Indonesia’s PT Natrindo Telepon Selular, both unlisted. It has said it plans to spend $450 million this year on its Indian operations.
“The privatization of Maxis could allow Ananda Krishnan to more freely utilize his own wealth should the two overseas ventures require more capital than what Maxis’ balance sheet could comfortably allow in the short-term,” Chong said.
Krishnan-controlled firm Usaha Tegas Sdn Bhd, a major shareholder in Maxis, has notified the company that it and its affiliates will make an offer by Thursday, Maxis said.
Krishnan held an indirect interest of 47.05% in Maxis as of April last year, according to company data. At the current share price, a buyout bid for the remainder of about 53% would cost around 17.4 billion ringgit ($5.1 billion).
It would be the largest deal unveiled in Malaysia since three plantations firms signed an $8.9 billion merger in January.
Usaha Tegas “has indicated that, barring unforeseen circumstances, the notice of takeover offer will be served on the company on or before 3 May 2007”, Maxis said in a brief statement.
A local fund manager said he expected Krishnan to offer no more than a 10% premium over Maxis’ last traded price of 13 ringgit for the remaining shares.
“The stock is trading around its fair value, so I don’t think there will be a big premium in the (offer) price,” he said. Maxis stock, which was suspended from trade before the company statement, has climbed nearly 50% in the past 12 months, outperforming the wider market by about 7%.
The stock fetches 16.2 times projected earnings, compared with India’s top mobile phone services firm, Bharti Airtel, on 38 times and China Mobile on 18.2 times.
The reclusive 68-year-old Krishnan, a former oil trader, also controls Malaysian pay-TV operator Astro All-Asia Networks Plc. and gambling and leisure firm Tanjong Plc.
The Harvard Business School graduate, with a net worth of $6 billion according to Forbes magazine, was a close friend to former premier Mahathir Mohamad.
Shares in Astro jumped on speculation that it, too, could be bought out by Krishnan.
Mark Bendeich contributed to this article.