The Star Online: Business
The Star Online: Business |
- Petronas takes MISC private in RM8.8billlion deal
- Citigroup may exit consumer banking in more nations
- Honda trims profit forecast
| Petronas takes MISC private in RM8.8billlion deal Posted: 31 Jan 2013 05:15 PM PST PETALING JAYA: In a move that has caught the market by surprise, Petroliam Nasional Bhd (Petronas) is offering RM5.30 per share to buy out minority shareholdings in MISC Bhd, with the intention of taking the latter private. The buyout, if successful, will remove the close to RM20bil company in market capitalisation from Bursa Malaysia, making it one of the largest privatisation deals in recent times. Petronas, which owns 62.67% or 2.797 billion shares of MISC, would be forking out around RM8.83bil to buy back the shares it does not own. The RM5.30 offer price works out to a premium of 18.04% or 81 sen above MISC's closing price of RM4.49 on Wednesday. In the takeover notice issued to MISC, Petronas said it did not plan to maintain MISC's listing status. Petronas said the offer was conditional on having received valid acceptances, which would result in Petronas holding 90% or more of the total MISC shares. MISC's other substantial shareholders are the Employees Provident Fund at 9.66% and Skim Amanah Saham Bumiputra at 6.35%. The takeover notice did not state the rationale for the privatisation of MISC. However, in a statement issued by Petronas, it said that MISC was an important part of its integrated business and that the prevailing industry backdrop and uncertain global economy had made efforts to sustain and transform the business of MISC challenging. "The offer represents a significant step by Petronas to take MISC private and obtain full control of it." The national oil corporation said this would provide it with greater flexibility in deciding MISC's strategic direction. MISC is one of the largest shipping companies in the world and also operates shipping-related services. Petronas said that it had no plans to dismiss or make redundant the employees of MISC after the privatisation. It also said that it had "no intention of making a separate takeover offer for MISC's listed subsidiary Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE). MISC owns 66.5% of MMHE. However, the proposed buyout has surprised many analysts, as it came at a time when the shipping giant was turning around after several quarters of losses. It was also coming close on the recent C$5.2bil (RM16.16bil) takeover of Canadian-listed Progress Energy Resources Corp by Petronas. Zulkifli Hamzah, head of research at MIDF Amanah Investment Bank, said: "We are caught by surprise by the privatisation of MISC, especially as it had gone through a kitchen-sinking exercise in late 2011 or early 2012 and would have, therefore, been in a much better financial shape." He added that while the petroleum tanker division was still suffering from high supply in the sector, recovery should be due in the near future. "Nevertheless, the decision to delist MISC reflects the stance of the controlling shareholder that the market is not doing justice to the valuation of the company. Taking the company private could be a precursor to more corporate actions involving MISC." MISC's share price has remained lacklustre in recent years. It had hit a high of RM9.94 on Dec 6, 2007 and a nine-year low of RM3.87 on June 5 last year. Yesterday, the stock closed at RM4.45 before trading was suspended. Another analyst said: "I think Petronas just feels that MISC's valuation is at a rock bottom, and it can add a lot more value by restructuring the business away from the public eye." He, however, thought that the offer price could be higher. "Our sum-of-parts calculation for MISC is RM6.20, so RM5.30 is not fair'." MISC's bottomline has been volatile in the recent past due to the challenging shipping business. But it was turning the corner following the sale of its liner business in December 2011. |
| Citigroup may exit consumer banking in more nations Posted: 31 Jan 2013 04:57 PM PST NEW YORK: Citigroup Inc is looking to pull out of consumer banking in more countries in an effort to lower costs and boost profits, according to two people familiar with the matter. In December, Citigroup said it was withdrawing from consumer banking in five countries Pakistan, Paraguay, Romania, Turkey and Uruguay as part of an expense reduction plan that would save US$1.1bil a year and eliminate 11,000 jobs. The cuts were one of Michael Corbat's first major steps as chief executive, a position he took in October. "There is more on the list," said a source familiar with the situation. The bank had been looking for months at countries, customer segments and products to cut, the source said, but declined to name any of the additional countries. Sean Kevelighan, a Citigroup spokesman, said the bank was focused on major cities with the highest growth potential for its consumer business and would continue to invest in its franchise and optimise its assets. Citigroup is one of the most international of US banks, serving consumers in 40 countries out of the 100 in which it has some kind of presence. Any cuts would likely represent a paring of the portfolio rather than a complete rethinking of the bank's commitment to global consumer banking. Outside the United States, just three countries Mexico, South Korea and Australia account for half of the company's loans to consumers and the bank's presence in many other countries is tiny. Investors said scaling down in some markets made sense. "If they're not going to have a significant presence, they shouldn't be there," said Mark Mandell, portfolio manager at Dalton Investments, which has US$1.8bil under management and owns Citigroup shares. Speaking on a conference call with analysts and investors earlier this month, Corbat said he intended to make regular assessments of "how and where and with whom" the company generated revenue, so the process of cost cutting is more "BAU," or business as usual, instead of a one-time event. Analysts unsuccessfully pressed Corbat to give more detail about which other countries he might focus on to cut costs. Corbat, who previously oversaw company operations in Europe, the Middle East and Africa, said that, over time, managers in different countries tended to expand by veering into tangential businesses and ended up saddling the company with extraneous and inefficient operations. - Reuters |
| Posted: 31 Jan 2013 04:55 PM PST TOKYO: Honda Motor Co Ltd has trimmed its annual net profit forecast by 1.3% to 370 billion yen (US$4.1bil) on poorer-than-expected car sales in China and Europe, even as it sees strong sales in the United States, its biggest market. Japan's third biggest automaker said that its net profit for OctoberDecember was 77.4 billion yen (US$849.9mil), compared with the 47.7 billion yen booked last year when it suffered from disrupted supply chains after floods hit it and its suppliers' factories in Thailand. The third-quarter result was below the average estimate of 111.4 billion yen among seven analysts polled by Thomson Reuters I/B/E/S. "The market had expected the company to release a bright outlook on the back of a weakening yen," said Yoshihiro Okumura, an analyst at Chibagin Asset Management. "It was negative that the company did not raise its full-year outlook. Now, investors will be watching how the carmaker will try to raise sales in the core US market this year," Okumura said. Honda, which relies on the United States for 40% of its global sales, maintained its North American car sales forecast for the year to March. For rivals Toyota Motor Corp and Nissan Motor Co Ltd, the United States accounts for about a quarter of global auto sales. In calendar year 2012, the US auto market posted its strongest sales figures since 2007 at 14.5 million vehicles, and the momentum is likely to continue into January. Honda cut its global car sales forecast to 4.06 million vehicles from 4.12 million, and its European car sales outlook to 185,000 vehicles from 205,000. In China, Honda sold 604,000 vehicles in 2012, lower than the initial goal of 750,000 it set before sales started falling in September. The financial year in China ended in December. Japanese brands in China suffered from an outbreak of anti-Japan sentiment in late 2012 after the two countries became embroiled in a diplomatic dispute over islands both claim as their own. The pace of recovery in China was slower than Honda had expected, executive vice-president Tetsuo Iwamura said. In the final quarter and the next business year, Japanese carmakers will be helped by the yen's recent weakening against the dollar, as they can convert overseas profits back to the yen at a more favourable rate and export cars more cheaply. The Japanese currency is trading around 91 to the dollar, well down from 78 at the start of the OctoberDecember quarter. Honda changed its average dollar rate assumption to 81 yen from 80 yen for the financial year that ends in March. For the fourth quarter, its dollar rate assumption was 85 yen, executives said. Honda is the first among major Japanese automakers to announce third-quarter earnings. Toyota is set to announce on Feb 5, and Nissan on Feb 8. - Reuters |
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