MISC rises on EPF's higher buyout offer

MISC Bhd, the world’s second-largest liquefied natural gas shipper, gained the most in a month in Kuala Lumpur after its biggest minority shareholder said it wants Petroliam Nasional Bhd (Petronas) to raise its buyout price.

The stock advanced as much as 2.1 per cent to RM5.39, its steepest intraday increase since February 4, with trading volume about triple its three-month daily average. The stock pared gains to RM5.33 at 11:40am. The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent.

Petronas, Malaysia’s state-owned oil and gas group should increase its RM8.8 billion or RM5.30 per share, general offer, Tan Sri Azlan Zainol, chief executive officer of Employees Provident Fund (EPF), said in an interview after the market closed on March 1. Petronas already owns 63 per cent of MISC, while the nation’s biggest pension fund holds 9.6 per cent of MISC, according to data compiled by Bloomberg.

"Investors are betting on Petronas offering a higher price, including EPF," Vincent Khoo, Kuala Lumpur-based head of research at UOB-Kay Hian Holdings Ltd, wrote in an e-mail to Bloomberg News. "At the same time, it appears that Petronas is not willing to up the general offer price, so there will be a gridlock in the meantime."

Minority shareholders Penang Development Corp and Pacific Mutual Fund Bhd earlier told Bloomberg News the bid is too low.

It’s "fine" if investors reject it, the Edge newspaper reported over the weekend, citing Petronas president and chief executive officer Tan Sri Shamsul Azhar Abbas. MISC has a "sick" business and the takeover offer allows minority shareholders to exit at a premium, he was quoted as saying.

A buyout would provide Petronas with greater flexibility in deciding MISC’s strategic direction, the group said when making the offer. Azman Ibrahim, a spokesman for Petronas, declined to comment by phone today.

The Kuala Lumpur-based shipping group completed a rights issue at RM7 per share in February 2010. The stock tumbled 25 per cent in 12 months before the January 31 buyout offer, as the company booked losses and exited the liner industry. It’s since rebounded 20 per cent to trade above the offer price.

MISC shuttered its container-ship business last year to focus on LNG tankers after the cargo-box unit made US$789 million of losses over three years due to global overcapacity and falling rates. Last month, it reported fourth-quarter net income of US$231.9 million, recovering from a US$571.6 million loss during the same period a year earlier.-- Bloomberg