Wednesday, March 17, 2010

Astro Holdings to take Astro All Asia private at RM4.30 per share

So you have got inside information but can you really benefited from it?

(TheEdgeMalaysia)KUALA LUMPUR: Astro Holdings Sdn Bhd is taking ASTRO ALL ASIA NETWORKS PLC [] (AAAN) private at RM4.30 per share or RM8.5 billion cash. This is a premium of 74 sen above the last traded price of RM3.56.

Astro Holdings comprises of Usaha Tegas Sdn Bhd, Khazanah Nasional Bhd and Bumiputra Foundations, all of whom collectively hold 72.9% of voting shares in AAAN. It has no plans to maintain the listing status of AAAN.

AAAN said on Wednesday, March 17 the offeror had obtained irrevocable undertakings to accept the offer from certain parties acting in concert, who currently hold 72.9% of the shares.

Astro counter was suspended trading on March 15 but there was surged of volume and price prior to suspension. This makes me think that there are people already know something was brewing. So, I’m going to safe my breath trashing how unfair and “un-transparent” the market is.

I was puzzled by EPF moves on that day. I don’t know what the heck were they doing, they reduced their stakes from 8.65% to 8.61%. They were account for 50% of the trading volume prior to suspension in the afternoon. If they were continue to dump shares on that day, we the EPF savers would lose a lot of money!

Now that Usaha Tegas Sdn Bhd, Khazanah Nasional Bhd and Bumiputra Foundations already control 72%, most will think that they are pretty much in control. Shall we accept RM 4.30? Negotiation 101, never accept the first offer even though you know it is close to its fair value. I would expect EPF who owns a big block to negotiate aggressively. The stock is also heavily owns by a lot of smart money, I would hope them too not to give in easily.

Don’t try to intimidate the minority shareholders, okay?. Just tell them that RM 4.30 is way below its intrinsic value and let them raise the offer.

Disclosure: The author owns Astro and Astro CW. So, the author may be bias. By the way, the author bought the shares much earlier than March 15, 10 on basis of the stock was undervalued.

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