Tanjong offered RM21.80 a share

A consortium comprising his private vehicle Usaha Tegas Sdn Bhd and unnamed parties acting in concert, which together own 47 per cent of Tanjong, yesterday made an offer to buy out the firm at RM21.80 a share in cash.

The offer, which represents a 21.9 per cent premium over Tanjong's last traded price of RM17.88, came in higher than the market's expectations of a range of between RM20 and RM21.

The offer values the company at RM8.8 billion, with the minorities' portion at RM4.7 billion.

"It's a good price, and higher than my own target of RM20.20. I think people will go for it," said Edward Ong, an analyst who tracks the stock at Macquarie Research.
The consortium, known as Tanjong Capital Sdn Bhd (TCSB), does not intend to keep Tanjong listed and, if all goes well, it may be delisted sometime in October, said CIMB Investment Bank, an adviser to the deal.

Tanjong, which aims to be a global player in the power generation industry, requires substantial capital of at least US$6 billion (RM19 billion) to double its power generation capacity in the mid-term from 6,000 megawatts currently, said Datuk Seri Nazir Razak, group chief executive of CIMB Group Holdings Bhd, which owns CIMB Investment.

The substantial capital outlay could hinder its dividend payouts, he added.

"Private ownership will provide Tanjong greater flexibility to explore new markets and regulatory environments, the outcome of which may be uncertain. Accordingly, TCSB is offering minority shareholders the opportunity to exit at an attractive premium while not subjecting them to the associated risks of the company's next growth

phase," he told reporters at a briefing late yesterday.

Nazir said it was too soon to say if Tanjong's gaming business would be spun off.

Ananda had offered to buy out satellite operator Measat Global Bhd for RM662 million just two days ago, while a similar move was made on pay-television operator Astro All Asia Networks plc earlier in March. The reasons cited for those deals were similar to that for Tanjong.

Nazir said the Measat and Tanjong deals were undertaken on an almost back-to-back basis given that current conditions were "conducive", particularly for raising financing.

On the fact that three companies would be taken off the stock market this year, Nazir said it reflected the maturity of the local market.

"There's every possibility of some or all of the businesses coming back to the market at a later time," he said of Tanjong, a stock well liked by investors for its good dividend payouts.

He said it was possible that Tanjong might seek a strategic partner later to bring in capital.

Ananda in mid-2007 also took mobile phone operator Maxis Communications Bhd private, after which it brought in a foreign partner in the form of Saudi Telecom. A revamped version of the company, comprising only the domestic operations, was listed just last year.

Nazir said that the financing was already in place for the Tanjong deal. TCSB's offer will become conditional upon receiving acceptances of at least 90 per cent of Tanjong's shares.

CIMB and RHB Investment Bank Bhd were TCSB's joint financial advisers, while Standard Chartered Bank and RBS Asia Advisors (M) Sdn Bhd were the joint international financial advisers.

Tanjong will also cancel its London listing, effective August 27.