Shares of Keppel Telecommunications & Transportation (Keppel T&T) and M1 soared yesterday as both firms ended trading halts.
Telco M1, the target of a general offer by Keppel T&T and Singapore Press Holdings (SPH), roared to near the top of the actives list on a hectic day in the market.
M1 jumped above the buyout offer price of $2.06 to open at $2.10. It hit a high of $2.13 and enjoyed a heady session before closing up almost 30 per cent at $2.11. Nearly 40 million shares changed hands.
Investors were galvanised by the news on Thursday that Keppel Corp and SPH, which owns The Straits Times, are planning a pre-conditional voluntary general offer for M1 at $2.06 a share. They are seeking majority control of M1 to put in place transformation plans.
Also, Keppel Corp separately announced that it is aiming to privatise Keppel T&T at $1.91 a share.
That also had investors excited, with Keppel T&T shooting up 36.7 per cent to $1.86 on trade of 7.9 million shares. Keppel Corp slipped 2.8 per cent to $6.96, but SPH ended 2.9 per cent higher at $2.87 on 11.77 million shares traded.
WHAT TO EXPECT
We expect the consolidation of the mobile industry from four to three players to materialise in 2021 or beyond. Holding on to M1 shares would subject investors to a long wait before industry consolidation materialises.
ANALYST JONATHAN KOH
RHB Securities said the M1 offer was fair. The offer "presents an opportunity for minorities to exit, given intense competition in the market, which portends downside risks to M1's earnings and dividends".
CGS-CIMB analyst Foong Choong Chen upgraded M1 from "hold" to "add", writing on Thursday that the offer is likely to go through. One key downside risk is non-approval from the regulator, the Infocomm Media Development Authority.
OCBC Investment Research analyst Joseph Ng said his team has not ruled out the possibility of either a hike in the M1 offer price or Axiata, which is M1's biggest single shareholder, launching its own buyout.
Meanwhile, UOB Kay Hian put out a report titled "Keppel makes offers you can't refuse", calling both offers "fair" and asking shareholders to accept them.
Analyst Jonathan Koh said M1 holders could "avoid a painful period of intense competition and (average revenue per user) erosion" if they tendered their shares to the offeror ahead of TPG Telecom's arrival in the Singapore market.
"We expect the consolidation of the mobile industry from four to three players to materialise in 2021 or beyond," he added. "Holding on to M1 shares would subject investors to a long wait before industry consolidation materialises."