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By P Gunasegaram
Changes in the offer for Malaysia Airports Holdings Bhd (MAHB) indicate the rules and terms are being bent to near breaking point to enable the deal to go through, a situation which looks bad on regulators and may well endanger the integrity of the market.
It is astonishing that two public institutions, sovereign wealth fund Khazanah Nasional and retirement fund Employees Provident Fund (EPF), are allowing their name to be sullied through this offer which has raised questions over its desirability, methods and market confidence.
As the end nears for the offer by the Gateway Development Alliance led by Khazanah and EPF, a change in the game enables the deal to go through because of a lower threshold for acceptance of 85% control instead of the previous 90%. Acceptances are already enough for 86.5% control.
But there is a way to beat this nefarious back-handed move still. Because the offer materially changes, those who have accepted it can withdraw their acceptances - that’s the only way to beat the deal now.
Unheard of
This is unheard of for a takeover offer in Malaysia which is tantamount to shifting goalposts in the middle of a match. It is a wonder that regulators Bursa Malaysia and Securities Commission are standing by and watching this take place.
Not only has the control threshold been brought down to 85%, the offer has been extended further to Feb 4 from Jan 24. But here’s another rub, the date for withdrawing the offer is shorter - Jan 28 . It's puzzling why this is so. Is it to give less time for people to withdraw acceptances? Why?
As it became obvious that the offer will not gain enough acceptances to give at least 90% control to the offerors, the rules of the game were changed midstream, which is bad on both Khazanah and EPF who are supposed to adhere to the highest standards of corporate behaviour given their size and position.
It has sullied the image of the two institutions, who have mostly improved their image in recent years only to now have it dragged through the mud and slime again.
Blatant disregard for minorities
Such blatant disregard for minority interests, changing threshold levels in the midst of an offer, does not bode well for the market which will be looked at with suspicion by both foreign and local investors who rightfully suspect that strong hidden hands are behind the takeover offer.
The consortium's other partners besides Khazanah and EPF are hedge fund Blackrock-controlled Global Investment Partners (GIP) and the Abu Dhabi Investment Authority (ADIA). If the offer is successful, Khazanah will increase its ownership in MAHB from 33.2% to 40% and EPF from 7.9% to 30%. ADIA and GIP will hold the remaining 30%.
Collectively, Malaysian investors, through Khazanah and EPF, would own 70% of MAHB. The government will retain special share rights in MAHB and the chairman and CEO will continue to be Malaysian citizens.
The original closing date for the offer was Jan17, already extended from Jan 8. It is likely if the date was maintained it would not be successful, but it has been extended again by a week to Jan 24 and now Feb 4.
Blackrock’s alleged strong links to Israel rocked the deal from the start but it was not enough to derail it. There were other more compelling reasons for the deal not to go through as I explained in this article titled Minority shareholders should reject offer for MAHB.
These included the analysis that GIP, the partner supposed to bring expertise into the deal, does not have a great track record in terms of managing airports. In addition independent advisers said the deal undervalues MAHB by as much as 20% and five independent directors advised rejecting the deal.
And then reports have emerged that EPF may have effectively lost some RM500 million from trading shares. Malaysiakini reported: According to MCA president Wee Ka Siong, EPF had pared down its holdings in Malaysia Airport Holdings Berhad drastically from around 15 percent at the start of 2023 to just under six percent by year-end, selling this at rates as low RM6.74 per unit.
An unnecessary deal
Reportedly it started buying back shares at a higher price in May 2024 - around the time that news of the MAHB takeover deal by the consortium of which EPF is part, surfaced. It is alleged that the difference in share prices in 2023 and 2024 resulted in around RM500 million in losses.
EPF had justified its business dealings as being necessary to, among others, pay dividends to contributors. But Wee described that as baloney.
With all this hanging over their heads, is it really necessary for this deal to go through for Khazanah and EPF? Why so desperate when their reputations are smeared and the very integrity of the stock market is in question?
(P Gunasegaram laments that we have not learnt from previous misadventures to ensure that market integrity is preserved at all times, good or bad. The consequence is market derating and erosion of confidence.)
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