Share
- The buyout comes at a time when Genting Malaysia is bidding for a casino licence in New York as part of a US$5.5 billion (RM23.19 billion) resort development in Queens.
KUALA LUMPUR (Oct 14): Genting Bhd (KL:GENTING) plans to buy out and delist its unit Genting Malaysia Bhd (KL:GENM) in a deal worth RM6.7 billion.
The offer to minority shareholders is equivalent to RM2.35 per share, according to the takeover notice posted to Bursa Malaysia on Monday. The price tag is a premium of nearly 10% to Genting Malaysia's last price of RM2.14 last Friday before trading of the stock was suspended for the announcement.
There is no share-swap offer for the privatisation deal.
The offer is conditional upon Genting receiving enough acceptance to raise its shareholding above 50% of the voting shares in Genting Malaysia.
Currently, Genting holds a 49.36% stake in Genting Malaysia.
The privatisation, if successful, would mark the exit of a company listed on the Malaysian stock exchange nearly four decades ago.
The acquisition would be the largest since the takeover of Malaysia Airports Holdings Bhd worth over RM12 billion and completed earlier this year, according to data from Dealogic.
The buyout comes at a time when Genting Malaysia is bidding for a casino licence in New York as part of a US$5.5 billion (RM23.19 billion) resort development in Queens. A decision is expected by Dec 1, followed by the issuance of licences by Dec 31.
Shares of Genting Malaysia, meanwhile, have largely remained below pre-Covid levels partly dragged by related-party transaction concerns after the company took over the loss-making Empire Resorts owned by the founding family of the Genting group.
Both Genting and Genting Malaysia have also been kicked out of the FBM KLCI, the country’s benchmark equity index.
The takeover could face resistance and hold-out from shareholders, UOB Kay Hian analyst Jack Goh told The Edge. The offer price of RM2.35 per share is “unattractive”, coming in below average valuations and about 20% below the stock’s peak last year, he flagged.
Goh also noted that the offer price also does not take into account the potential earnings upside from the downstate New York casino licence and the large free float of Genting Malaysia shares that makes the stock highly liquid.
While off lows, Genting Malaysia is still down over 5% year to date while a large majority of research houses have been cautious of the stock’s outlook.
There are now 11 ‘hold’, four ‘sell’, and only three ‘buy’ calls on the stock. The average target price is RM2.06, according to Bloomberg, which implies a potential decline of about 4% in the next 12 months from the current share price.
Both Genting and Genting Malaysia will resume trading on Tuesday morning.
Genting Malaysia, listed on Bursa since 1989, holds the group’s flagship Resort World Genting that draws tens of millions of visitors to the hilltop facilities annually.
The company also operates the group’s major US and UK operations and a small casino in Egypt.
As Penang girds itself towards the last lap of its Penang2030 vision, check out how the residential segment is keeping pace in EdgeProp’s special report: PENANG Investing Towards 2030.
