M1 receives $1.4B buyout offer from current shareholders

M1 shareholders Keppel Corp and Singapore Press Holdings have made a joint offer to buy out the remaining shares in the Singapore telco for an estimated S$1.91 billion (US$1.4 billion).

Two current shareholders of M1 have a made a joint offer to buy out the remaining shares in the Singapore telco for S$2.06 per share, or an estimated S$1.91 billion (US$1.4 billion).

Keppel Corp (KCL) and Singapore Press Holdings (SPH) made their pre-conditional voluntary general offer through their joint venture company, Konnectivity, which was majority owned by the former.

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Currently holding 13.45 percent share in M1, SPH said it would pump its crop of 124.45 million shares into Konnectivity. The local media company added that it expected to invest up to S$51.3 million (US$37.63 million) in cash to fund the buyout offer.

Should M1 accept the offer, SPH said its shares in Konnectivity would be between 20 percent and 43.84 percent.

SPH CEO Ng Yat Chung said the buyout offer indicated M1's potential long-term value creation from the telco's growth and business transformation plans following the anticipated buyout transaction.

Ng said: "KCL has demonstrated strong commitment to lead M1 in its transformation plans, and we believe they are the right partner to take M1 further. We also see opportunities for SPH to leverage M1's mobile platform to offer on-demand and digital-ready content to better serve our customers."

He added that buyout would result in added earnings for SPH shareholders.

KCL owns 19.3 percent of M1 through its 80 percent stake in Keppel Telecommunications and Transportation (Keppel T&T), through which it planned to make a general offer at S$1.91 in cash and delist. Keppel T&T would remain an M1 shareholder.

KCL CEO Loh Chin Hua said: "Keppel has increasingly been transforming its traditional B2B business to include retail customers in gas, electricity, and urban logistics. Incorporating M1's capabilities and 2 million customers in a combined digital platform would provide opportunities for synergies and cross selling of services.

"Notwithstanding the challenges currently facing the industry, we see considerable potential in M1 and have developed a transformation plan to sharpen M1's competitiveness," Loh said, but noted that the telco's transformation would be a "complex undertaking" requiring "several years". "Hence, the offer allows M1 shareholders that are not prepared to wait and bear the related risks to realise their investment in M1 upfront."

Both KCL and SPH have been M1 shareholders since the 1990s.

Industry regulator Infocommunications Media Authority (IMDA) would have to approve the offer for the deal to move forward. Upon this approval, a formal offer would be made and become unconditional when Konnectivity and its associated parties obtained more than half of M1's issued share capital.

Credit Suisse in Singapore is SPH's financial adviser, while DBS Bank is advising KCL with regards to the M1 offer.

The country's third-largest mobile operator, M1 in March announced its partnership with Keppel Electric to offer bundled price packages that would include electricity and mobile services.

Australian carrier TPG Telecom in December 2016 snagged Singapore's fourth telco license and was expected to offer nationwide outdoor mobile coverage by year-end.