Plea To Retain The NSTP's Name

A Kadir Jasin

[ANONYMOUS comments with not be entertained. When commenting, your real identity is preferred. But a suitable pseudonym is accepted. If you have to use anonymous, please print your name or pen name at the bottom of your message. Please avoid seditious, defamatory and libelous statements. Unrelated comments will not be given priority.]

[UPDATE, OCT. 18)

SOME thoughts on the proposed acquisition and merger (A&M) of New Straits Times Press (Malaysia) Berhad by its sister company, Media Prima Berhad:-

1. Must be fair to minority shareholders of NSTP. NSTP has consistently shown better balance sheet and market valuation than Media Prima;

2. The proposed pricing and the ratio of share exchange – one NSTP share for one Media Prime share at RM2 and 1 free new Media Prima warrant for every 5 Media Prima shares accepted -- do not suggest that minority shareholders of the NSTP will enjoy the best deal;

3. This is a very unkind and hurtful cut. It was the NSTP’s money that was used to fund TV3, the predecessor of Media Prima;

4. Although controlling shareholder (Media Prima) cannot vote in the acquisition and merger (A&M) exercise, it’s bound to get the support of other substantial shareholders. The A&M is as good as done;

5. Controlling shareholder stand to make substantial capital gains by disposing the shares of the enlarged company upon re-listing. This has to be one of the key things on their mind;

6. The controlling shareholders have to make sure that at least 25 per cent of the shares are in private hands before re-listing;

7. There are bound to be staff redundancies when the two entities are merged. Staff rationalization may not happen immediately for public relations reasons, but will happen eventually; and

8. If this A&M is proven to be successful in creating one of the largest media conglomerate in the country, there will be temptation to rope in the Utusan Melayu Berhad at a later stage, since they share the same “controlling shareholder”.

[ORIGINAL POST]

THE MEDIA today reported that trading on Bursa Malaysia of New Straits Times Press (Malaysia) Berhad and its controlling shareholder, Media Prima Berhad were suspended “pending a corporate exercise.”

Media Prime told the bourse that “it will be making a very material announcement of a corporate exercise involving the group and the NSTP.”

Well, it no longer a secret that Media Prima is planning to take the NSTP private, which automatically ends its Bursa Malaysia listing, and merging it with the former.

Presumably, the listing status of the merged entity will be assumed by Media Prima. The venerable NSTP name may disappear from the bourse unless the Media Prima shareholders, the board and management decide to retain the NSTP brand.

Since I wrote about this merger in this blog on Sept. 23, two top managers of Media Prima had met me separately to explain their plan.

As a former NSTP staff, board member of STMB (Media Prima’s predecessor) and a minority shareholder of the NSTP, I thank them for their goodwill.

In brief I told them the following:

1. The minority shareholders of NSTP are loyal, helpful and understanding. They stay with the company through thick and thin;

2. They are very attached to the NSTP and, therefore, very emotional about the name NSTP;

3. The board and management of Media Prima have the choice of retaining their goodwill by giving them a fair deal and retaining the NSTP’s name or expect a lot of flax from them;

4. I went on to suggest that they consider marrying the Media Prima and NSTP names as the name of the merged and enlarged entity – something like Media Prima NSTP Berhad.

5. I told them, as a minority shareholder, that the minimum that I expect from them; and

6. After all many merged companies retained their former identities and brands like Glaxo Smith Kline (GSK), Salomon Smith Barney and LVMH.

Let us wait and see.

[UPDATE, 17 Oct.]

FOLLOWING is Media Prima’s statement:-

Media Prima Consolidates Position in NSTP to Create a Leading Integrated Media Group

Proposed Acquisition to Benefit Both Shareholders

HIGHLIGHTS
1. Offers an opportunity for NSTP shareholders to enhance value of their investments by unlocking the potential of the company.
2. Annual revenue of more than RM1 billion projected for Enlarged MPB
3. Creation of the nation’s truly integrated media group with presence across multiple media platforms
4. A Conditional Take-Over Offer to be made to NSTP’s shareholders by way of a 1:1 share exchange for MPB shares at an issue price of RM2.00 together with 1 free new warrant in MPB for every 5 offer shares accepted.
5. MPB to raise RM150 million via a bond issue attached with 50 million detachable warrants.

PETALING JAYA, 16 October 2009 – Media Prima Berhad (MPB) today announced its proposal to acquire Malaysia's oldest and largest newspaper publisher, The New Straits Times Press (Malaysia) Berhad (NSTP). The enlarged entity of MPB and NSTP will create the country’s truly integrated media group offering advertisers the widest reach in terms of TV viewership, radio, outdoor, new media and print via a full range of multi-media channels.

Under the proposal the editorial, management and board of MPB and NSTP will remain mutually independent and exclusive as per other subsidiaries of MPB – supported by the efficiencies brought about by revenue, cost and marketing synergies. The identities and brands of its individual print, television and other media platforms will be retained.

The consolidation of the two media companies is projected to generate over RM1 billion in annual revenue with net profits exceeding RM140 million. Under the proposed transaction, the enlarged media entity will have the potential to emerge as one of the largest media groups in Malaysia in terms of sales and total shareholders funds.

“MPB’s current equity stake in NSTP does not permit us to translate our vision to unlock both MPB and NSTP’s full potential and steer it quickly enough in the strategic manner required to take advantage of the opportunities which we come across. So the proposed acquisition is a decisive move to chart our growth strategy,” said MPB’s Chairman, Datuk Johan Jaaffar.

A Conditional Take-Over Offer will be made to the shareholders of NSTP by way of a 1:1 share exchange for MPB shares at an issue price of RM2.00 together with 1 free new warrant in MPB for every 5 offer shares accepted.

The Offer is undertaken principally to increase MPB’s equity interest in NSTP with the intention of making NSTP a subsidiary.

The share exchange ratio of 1:1 is derived from market price driven benchmarks such as historical average price of MPB and NSTP in the past one year, Volume Weighted Average Price, average analysts consensus target prices and average trading comparables based on price / earnings multiple for selected media companies in the region.

“We noted the recent price hike which was in favour of NSTP but we believe the recent hike in the share price in the last four weeks was largely driven by speculative interest. We are valuing our offer price on the fundamentals of the business, historical average price of NSTP in the past one year prior to such speculative spur in share price” said MPB Group Managing Director, Dato’ Amrin Awaluddin.

He further added, “We believe the offer is fair and that it does not represent an exit offer to the shareholders of NSTP but the “pooling of strengths” between two leading media groups in their respective fields. It provides both MPB and NSTP shareholders the opportunity to participate in the exciting prospects of the enlarged Group (“Enlarged MPB Group”)”.

At the same time, MPB also intends to distribute up to 24,604,298 new MPB bonus warrants to its existing shareholders at an entitlement date to be determined later.

To finance its working capital and investments, MPB also intends to raise RM150 million via a bond issue attached with 50 million warrants which are convertible into 50 million shares in the Enlarged MPB Group. Additional plans in the future may include launch of an Employee Share Option Scheme (“ESOS”) for the employees of Enlarged MPB.

The Enlarged MPB Group will be the only media company in Malaysia offering television, print, radio, new media and outdoor advertising channel to potentially capture the single largest share of the advertising expenditure.

“The shareholders of both MPB and NSTP will see their investments benefit from the synergy, growth potential and focus that will result from the opportunities which the Enlarged MPB Group will offer,” said Amrin.

“It creates an excellent opportunity to leverage on the synergy available in both companies, to bring about an evolutionary change which mirrors the needs of advertisers by harnessing the media platforms available within the Enlarged MPB Group which has the potential to produce a business in the scale of over RM1 billion in annual revenue and a dominant presence,” added Amrin.

Both NSTP and MPB will be able to tap on the resources and expertise available within the enlarged group to expand revenue and increase earnings via consolidation of certain operations and expanding into other earnings accretive activities.

Amrin also expressed his confidence that NSTP shareholders would decide in favour of the proposal as it presented them with an excellent opportunity to see their investments unlocked and perform to their true potential when more advertising based revenue comes in.