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Ananda Krishnan, one of Malaysia’s richest men, has surprised the market by proposing to buy full control of Maxis Communications, the nation’s largest mobile operator, which he founded.
The buy-out offer, which could be worth at least US$5bn, may be related to plans by Mr Krishnan to expand Maxis overseas without minority shareholder interference. There is also speculation that Maxis might seek a foreign listing later.
Maxis is the sixth largest company by market capitalisation on the Bursa Malaysia but is favoured by international investors because it is the biggest listed company not under state ownership. Maxis is seeking to expand operations in Indonesia and India as its home market matures, following such regional rivals as Telekom Malaysia and Singapore Telecommunications in going abroad.
Maxis owns India's Aircel and Indonesia's Natrindo Telepon Secular, both unlisted. Aircel is performing well, with Maxis saying it will invest $3bn in its Indian operations over the next five years.
But Maxis has encountered problems with its Indonesian business because of start-up costs and difficulties in expanding its network.
Usaha Tegas, the holding company with which Mr Krishnan controls Maxis with an indirect 47 per cent stake, is expected to make an offer for the rest of the shares by Thursday. At current share prices, the offer would be valued at M$17.4bn (US$5.1bn).
Usaha Tegas is negotiating to buy a stake in Sri Lanka Telecom, the island's biggest fixed-line phone operator, with Maxis possibly joining the bid.
The buy-out offer comes after a year in which the Maxis share price has climbed nearly 50 per cent. That puzzles some analysts, since Mr Krishnan is making his offer when the share price is at a peak valuation.
The current Maxis share price of M$13 is close to analysts' estimates of its fair price.
However, Maxis still trades lower on its estimated book value and projected earnings than other regional telecoms groups, including India's Bharti Airtel and China Mobile.
Malaysia's mobile phone market is fast reaching saturation, forcing Maxis and its smaller rival, state-controlled Telekom Malaysia, to expand overseas for growth.
In Malaysia, more than three-quarters of the 26m population own a mobile phone.
Mr Krishnan, a former oil trader, also controls two other profitable ventures, pay-television operator Astro All-Asia Networks and gaming group Tanjong. He is worth $6bn and is Malaysia's second richest man, according to Forbes Magazine.