The game people play

The top two richest men in the country, Robert Kouk and Ananda Krishnan (AK) have decided to take their listed firms private.

The question is why? Being heavyweight players on our local bourse, should not they be propping up the market with their quality companies? In case they forget, they owe the country everything especially in giving them the opportunities to make their vast fortunes here.So, they must share their good luck with the public by allowing them to hold shares in their companies. This is the least they could do.

Kuok has shifted his domicile assets worth RM15.5 billion from Malaysia to Singapore by selling his controlling stakes in PBB Berhad to his Singaporean nephew through Singapore-listed Wilmar International Ltd. Many market players will tell you that nothing is happening here, it is a matter of shifting your marbles from the right to the left pocket. In fact, it has incest written all over this deal. Granted Kuok is in his eighties, time is running out and he has to sort out his assets, many want to know if there is more that meets the eye?

As for AK, the Astro and Maxis King, the rationale put forward is that he wants to penetrate further into India and Indonesia, therefore, he does not wish to be constrained by regulatory requirements and as heavy capital expenditure is involved, it will be sometime before we can see the return on investment. This will also prevent a dampening effect on the share price from occuring .

As the spin goes, it is a win-win situation for all, especially for the minority shareholders as they will benefit tremendously from this exercise. AK is willing to pay RM15.60 a share in cash, which is pitched at 20% premium to Maxis’ closing price of RM13 on April 27. The whole deal to take the company private is valued at RM39.9 billion.

We can see that it is going to be exciting times for Maxis, unfortunately, for the local equity market, it is going to be deprived of a blue chip with a fantastic track record and sound management.The KL Composite Index will also be losing one of its major component stocks.

Those who are not happy with this move are saying Maxis is the holder of a government licence as part of an earlier privatisation programme, so why should AK be given the green light to do what he wants. It looks like a double privilege for him.

Many also worry that there will be lesser quality stocks to attract players to the market if more blue chips are allowed to be taken private.

The more cynical of the market watchers are asking whether these two players know something that we don’t. Are there highwaymen lurking somewhere? Sometimes, they say the best way to vote is with your feet, and what does this look like to you.?