Saturday, November 25, 2006

General Offer on Magnum!!

Wow!

Here's a huge development in Magnum.

  • MPHB launches RM2b GO for Magnum Corp
    24 Nov 2006 5:46 PM

    Multi-Purpose Holdings Bhd (MPHB) has launched a RM2 billion conditional general offer (CGO) for the remaining 60.1% stake in Magnum Corporation Bhd, at an offer price of RM2.30 per share in cash. The stake comprises of about 859 million shares

And here is what the deal is all about.

  • Multi-Purpose Holdings Bhd (MPHB) has launched a RM2 billion conditional general offer (CGO) for the remaining 60.1% stake in Magnum Corporation Bhd, at an offer price of RM2.30 per share in cash. The stake comprises of about 859 million shares. MPHB said on Nov 24 the CGO would enable it to consolidate the strong cash-generating gaming business under the MPHB group as a subsidiary

  • Meanwhile, Magnum - which owns 76.1% in Magnum 4D Bhd - had also proposed a voluntary general offer (VGO) for the remaining 23.9% interest, or 39.8 million Magnum 4D shares. Based on the offer price of RM3 cash per Magnum 4D share, the deal is valued at RM119.4 million. Magnum 4D is the sole agent of Magnum for the sale of four-digit numbers forecast betting tickets in Malaysia.

And as mentioned in Sahamas:

What about those who bought Magnum at RM2.50 or RM3.00 for its "defensive" qualities?

This is a good issue for Magnum has always interested invested because of its cash pile. See blog posting Magnum and Its Cash Pile

However as argued about seeking value in Magnum:

It has corporate governance problem, but some investors are attracted to its high dividend yield and high cash pile. And some even speculate that there is a possiblity that it may be privatised by its holding company.

  • This corporate governance is not easy to explain and it's even harder to understand and it gets even more complicated depending on one's definition of investment.

Assuming that if you believe that investment is most logical if one treats the investment of a stock as buying a part ownership of a business then it would simply make sense that since the definition of a company with poor corporate governance equates to an owner whose integrity is questionable, one would simply avoid being part owner with someone who you cannot trust.

As famously said..

  • i have never thought it good business to play any game in any place where it was necessary to leep an eye on the dealer because he was likely to cheat if unwatched.

Here is an update-link posted on Business Times.

And here are some comments said.

  • "Once we streamline Magnum as a subsidiary, future earnings as well as operating cash flow of the group will be significantly enhanced," he said in a statement.

    After the exercise, MPHB said it intends to continue maintaining the listed status of Magnum on Bursa Malaysia.

    At the same time, Magnum, which owns 76.1 per cent of Magnum 4D Bhd, also made a voluntary general offer for the remaining 23.9 per cent interest in the latter for about RM119.4 million.

    "This is a homecoming of sorts for MPHB as the successful execution of this exercise will restore the original corporate structure of MPHB, where Magnum and the gaming operations of the group were held as subsidiaries.

    "Only then can the full value of the gaming business be accurately reflected at the MPHB level," Surin said.

    He said streamlining the group's numbers forecast operator (NFO) business under Magnum and consolidating Magnum as a subsidiary of the group will give rise to a more efficient structure for management to enhance shareholders' equity value, and the earnings prospects of the NFO business and the group.

Future earnings as well as operating cash flow of the group will be significantly enhanced?

Errr... I am so confused. Silly Billy Me.

:s48:

Take Magnum. Can you tell me what's so wrong with Magnum's cash flow?

Ok, if i look at Magnum's latest earnings, take the most simplistic comparison of comparing the start of magnum's fiscal year cash versus at end of reporting quarter. For Magnum, start cash was 688.171 million and at end of reported quarter, cash stands at 735.810 million. Decent, isn't it? So MPHB says it wants to improve on it...

and the reason to take on this exercise is to give rise to a more efficient structure for management to enhance shareholders' equity value.

Simple question, did the company attempt to enhance the shareholder value in Magnum all these years?

An investor who bought Magnum based on hope of getting value from the excess cash in Magnum will surely find Magnum as an underperforming investment.

here is how Magnum perform since 2001.

How?

An investor seeking value for their investment in Magnum since 2001 would be find this as a rather disappointing investment, yes?

And what about them investors who invested in Magnum since 2004?

And oh, there are some who were betting that the a privatisation offer be made on Magnum.

Well, how?

Do you like what you see?

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