The Emerging of Gigantic Utilities Company
(YTLPOWER, 6742) indirect 70%-owned unit, SIPP Power Sdn Bhd has proposed to acquire the share of (RANHILL, 5272) with a 31.43% stake, for the value of RM405.18M. From the proposal, 99.5 sen /Ranhill share is proposed and 2.03 million Ranhill shares will be issued pursuant to the share dividend declared in early May. From the declaration, the 1st Interim via a share dividend distribution on the basis of half (0.5) share for every one hundred (100) existing ordinary shares held in respect of the financial year ending 31 December 2024.
Historically, YTL Power emerged as a substantial shareholder of Ranhill on Nov 1, 2023, after acquiring 243.33 million shares (equivalent to an 18.87% stake) from Cheval Infrastructure Fund LP. Upon the further acquisition, the aggregate direct shareholding in Ranhill Utilities will rise from 21.77% to 53.19%. This will subsequently trigger an unconditional mandatory takeover offer (MTO) to acquire all the remaining shares. Precluding the unforeseen circumstances, the acquisition proposal is estimated to be completed in June 2024 while the MTO is estimated to be completed by Q3 2024. As stated by the board, the acquisition process will enhance the utilities' core business, and complement its utilities portfolios in both geographical and operational.
As of 28 May 2024, RANHILL was closed at RM1.35 and YTLPOWER ended the trading day four sen higher at RM5.00.
How do you see this M&A corporate action? Let's comment below and vote for your choice.
By: Jshen Ng
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MAXYEOKING : Upon completion, SIPP Power direct shareholding in Ranhill will increase to about 34.32%(increase 2.90% from 31.42%)
MAXYEOKING : I think is unfair to Ranhill investors as the share price had closed at 1.35, nearly 40% premium from the expert valuation.
But is a positive on the M&A in the long term as YTL Power could improve Ranhill profitability.
Jshen Ng OP : After the acquisition, YTLPOWER will increase its share percentage to 53.19% however the forced acquisition will not be triggered as it doesn't meet the 90% requirement. Retailer can still observe and take note to the following QR.