RM2.2b bid to take Magnum private

MULTI-PURPOSE Holdings Bhd (MPHB) has partnered a private equity firm to launch a RM2.2 billion bid to take Magnum Corp Bhd, a gaming company, private.
The deal is an opportunity for MPHB to bring in CVC Asia Pacific Ltd to enhance the future performance of Magnum, MPHB said in a statement to Bursa Malaysia yesterday.
MPHB and CVC signed a heads of agreement for the deal yesterday. They have until February 20 to sign a definitive agreement.
"I believe this partnership will accelerate our growth over the long term, leveraging on CVC's international experience and networks," MPHB managing director Datuk Surin Upatkoon said in the statement.
This would be the second investment by CVC in Malaysia. In March, CVC led investors to buy Genting Bhd's paper and packaging business for some RM745 million.
Under this latest deal, a special purpose vehicle (SPV) will be set up where MPHB will hold 51 per cent and funds managed by CVC will have the rest.
MPHB, which holds 55.54 per cent of Magnum, will pay the remaining shareholders RM3.45 a share, a 12 per cent premium to its pre-suspension price. It will fund this with interest-free loans from the SPV and borrowings from Magnum.
Once MPHB gets full control of Magnum, it will then sell it to the SPV. It did not say how much CVC will invest for the 49 per cent stake.
As part of the deal, Magnum will also make a general offer for the 1.75 per cent stake it does not own in Magnum 4D Bhd at RM3 per share or a total of RM8.8 million.
However, the offer price of RM3.45 for Magnum was below what most analysts have cited as their fair value for the stock.
Nine out of 16 analysts have higher target prices, according to data compiled by Bloomberg.
Among others, OSK Research values Magnum at RM4, while ECM Libra pegs the stock at RM3.86.
This means that investors may not rush to accept the offer.
"It would seem too low a price to accept," said an analyst who declined to be named.