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M1 buyout bid finally goes through with Malaysia's Axiata exiting Singapore investment

After months of negotiations, Axiata Group has accepted a buyout offer from the Singapore telco's investors Keppel Corp and Singapore Press Holdings, divesting its 28.7 percent stake and investment in Singapore for an estimated gain of US$31.02 million.
Written by Eileen Yu, Senior Contributing Editor

M1's largest shareholder Axiata Group has accepted an offer for its stake in the Singapore telco that will see it exit the local market and finally bring to close a buyout bid that began in September last year. The move is estimated to generate a gain of 126.5 million ringgit (US$31.02 million) for Axiata's wholly-owned subsidiary, Axiata Investments, which had put investments into M1 since 2005 that have yielded dividends totalling 1.1 billion ringgit (US$269.69 million) in the past decade. 

The Malaysian telco group said the voluntary conditional general offer for all of its 28.7 percent stake was priced at 1.65 billion ringgit (US$272.14 million) and would see the company exiting its investment in Singapore. 

In its statement, Axiata expressed confidence in M1's long-term future despite the entry of a new market player that would present "short-term industry challenges". In spite of its belief in the telco's continued growth, the Malaysian group said it accepted the buyout offer because it needed to shift its capital towards new business priorities and drive its ambition of becoming "the next-generation digital champion" by 2022. 

It also did not want to be a minority investor in a potentially privatised company, Axiata said. It added that it would "participate in industry consolidation" if there were opportunities to do so as well as partake in potential acquisitions in new growth areas in its key markets. 

Axiata's president and group CEO Jamaludin Ibrahim said: "It is actually not an easy decision for us. We like our investment in M1 and believe in its long-term future. At the same time, we need to undertake a major reprioritisation and make better use of our capital to chart a new chapter for the group in line with our new vision, whilst also further enhancing our shareholders' value."

M1's current shareholders Keppel Corp (KCL) and Singapore Press Holdings (SPH) had launched a US$1.4 billion offer in September 2018 to buy out the remaining shares in the telco. Made through their joint venture Konnectivity, the initial offer was reportedly deemed inadequate by Axiata, which later called for offers to reflect "the accurate future value of M1". 

M1 CEO Karen Kooi Lee Wah in December retired after 23 years with the company, handing over the reins to former Pareteum Asia CEO Manjot Singh Mann. M1 had said Kooi would remain as a board director and advisor to the board until the end of February 2019 "pending developments related to Konnectivity's pre-conditional offer for M1 shares".


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