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May 4, 2007 1:09 am

Krishnan unveils M$15.8bn Maxis bid

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Ananda Krishnan, Malaysia's second-richest tycoon, on Thursday offered to pay M$15.8bn (US$4.62bn) for full control of Maxis Communications, the country's leading mobile operator.

Analysts said the deal – east Asia’s biggest buy-out outside Japan – shows the region is catching up with trends in the US and Europe in taking listed companies private to give owners greater freedom to restructure without minority shareholder interference.

Mr Krishnan and his partners, who own 59 per cent of Maxis, offered to pay M$15.60 a share, a 20 per cent premium to its last closing price. The offer would value the mobile operator at M$39.9bn. The biggest external Maxis shareholder is Templeton International, the asset management fund, with a 5.3 per cent stake.

The deal comes as Maxis is seeking to expand operations in bigger and less-developed markets such as India, Indonesia and Sri Lanka to reduce its dependence on a maturing home market, where 70 per cent of the population owns mobile phones.

ABN Amro, which with Malaysia’s CIMB invest­ment bank is jointly advising the deal, will provide up to US$7bn in financing, including operating costs and debt restructuring.

Excecutives say Maxis plans to relist its shares in Malaysia “when it achieves a more stable earnings profile”. There are no plans to list the company overseas.

There had been concerns that delisting Maxis would be a blow to Bursa Malaysia, the stock ex­change: Maxis represents 4 per cent of total market capitalisation and is favoured by international investors as Bursa’s biggest listed non-state company.

“Maxis will be able to move into the next phase
of dev­elopment as it expands overseas with greater flexibility as a privately owned com­pany,” says Neil Galloway, ABN Amro’s head of mergers and acquisitions for equity capital markets in Asia. An increased presence in Asia could boost the share price of Maxis once it is re-listed, since the stock is now trading lower on its book value than other regional telecoms groups. Maxis, founded by Mr Krishnan in 1995, was listed in 2002.

Leveraged and private equity buy-outs in south-east Asia are still relatively rare, but analysts believe more could be in the pipeline.

Temasek Holdings, the Singapore state investment company, recently offered to pay $1.2bn for full control of STATS ChipPAC, its chip assembly and packaging subsidiary. In 2004 Temasek sought to take private Neptune Orient Lines, although the effort failed.

Mr Krishan has a estimated fortune of US$6bn, Magazine says. His other main businesses include Tanjong, a gaming and property group, and Astro, a pay-TV satellite service.

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