No Deal! M1 Ltd’s Strategic Review Fizzles Out With No Suitor

M1 Ltd‘s (SGX: B2F) strategic review stirred rumours that Singapore’s smallest operational telco might be acquired. But eventually, it fizzled out with little drama.

On 17 March 2017, M1’s major shareholders, namely Keppel Corporation Limited  (SGX: BN4)Singapore Press Holdings Limited (SGX: T39), and the Malaysia-based telco Axiata Group Berhad (KLSE: 6888.KL) were revealed to be exploring a sale of their respective stakes in the local telco.

The news of the potential sale was well-received by the stock market. M1 shares had closed at $2.03 each on 16 March 2017, but proceeded to rise to a high of $2.27 in the months that followed.

M1’s peer, StarHub Ltd (SGX: CC3), was suggested as a potential acquirer. Another potential suitor was MyRepublic, which had lost out to Australia’s TPG Telecom in the bid to be Singapore’s fourth telco.

But as it turns out, any deal for control of M1 was not to be.

Dropping out

StarHub soon confirmed that it had no plans to acquire M1. The minutes for StarHub’s recent Annual General Meeting held on 19 April 2017 included the following statement:

“In reply to Mr Goh Yong Nghee Henry’s query on the potential acquisition of M1 Limited (“M1”), Chairman stated that the Company had no plans to acquire M1 after due consideration of all factors. The decision was made based on what was in the best interest of the shareholders.”

Then, on 6 July 2017, it was MyRepublic’s turn to put an end to speculation that it wanted to acquire M1. MyRepublic said that it had put in a bid, but had no intention of pursuing the deal.

Closing the chapter

On Tuesday, all three major shareholders of M1 ended their strategic review. SPH put out this statement:

“The Company wishes to announce that Axiata Group Berhad, Keppel Telecommunications & Transportation Ltd and the Company (collectively, the “Majority Shareholders”) have decided not to proceed further with the Strategic Review.

The Majority Shareholders have taken into consideration the proposals from interested parties, which despite a favourable level of interest, have not met the minimum criteria and parameters as determined by the Majority Shareholders.”

From the statement above, it is not clear what the criteria and who the interested parties were, besides MyRepublic. The statement above from SPH was followed by a sentence that made it clear there will be no transaction:

“For the avoidance of doubt, no arrangement or agreement with any third party has been reached in relation to each Majority Shareholders’ respective shareholdings in M1 Limited.”

In short, there will be no deal and investors will have to observe how M1’s business develops in the future. As it stands, M1 is finding it tough out there. The second quarter of 2017 saw M1’s profit fall by 20.8%, leading to a 25.7% decline in its interim dividend.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chin Hui Leong doesn't own shares in any company mentioned.