Wednesday, November 29, 2006

Bandit's back!

Hostile merger or what? Bandit, the poster who helped popularise this blog with his bombardments during the early days, and then disappeared from the screen for months now, has sent a scorcher about the "mother of all mergers". He might have been there in the same room with the PNB chairman when he was first told about the merger!
"Whether he was stunned or not, Ahmad Sarji listened attentively to Abdullah as he laid out the impending coalescence that is now dancing with the subtlety of hissing pit viper.
Ahmad Sarji played the situation with an admirably straight poker-face, never unmasking his emotion nor sentiment, even if he disapproved of the merger.
Among the senior management of the three companies, he had made it known that if he had his way, he would not have allowed this merger on the faith that the trifecta companies can be major global players in their own right."
[click comment to read the rest of Bandit's take; click here and here to know where he's coming from]

By the way, I was told that CIMB would be making around RM100 million from the deal. We'll wait for Nazir Razak to work out the numbers and tell us.

24 comments:

  1. Anonymous8:16 pm

    [Rocky's note: First sent to posting "Not Us - PNB" about an hour ago]

    The great smokescreen merger
    Or how to filch billion ringgit companies while everyone’s watching

    THERE are serious reservations over the dismantling of the Malays’ corporate soul – Sime Darby, Golden Hope and Guthrie – through a perfect corporate smokescreen: their merger. They are as cynical as they come, this merger that allows the legal and opportunistic filching of billion ringgit companies that would be hived off by the heralded amalgamation. The filching is as obvious to comprehend as the Pantai and other Malaysian corporate sell-outs to Singapore.
    No cheap Datukship for guessing who’s going to gobble up the non-plantation concerns: the rapacious hands of known cronies of the 4th floor cabal, better known as the crisis-prone puppeteers of a drowsily decrepit Prime Minister. We can safely assume that they are already fine-tuning the relevant takeover vehicles.
    To be sure, the merger of the “plantation concerns” within these three companies has longstanding merit and may be prudent for Malaysia’s well-established foray in the global palm oil and bio-fuel matrix for a generation to come. But that’s not the point.
    Every tired clich̩ had been frothily mouthed on the unification Рmother of all mergers, mega and massive Рbut unastonishingly, attention had been scrappily steered away from what would happen to the non-plantation companies that would be hived off and which predators, now circling like vultures over the corporate wasteland, would swoop into the billion ringgit businesses.
    At RM9 billion worth culled from nine listed companies, it would be the biggest pay dirt for even the savviest corporate player, a gobsmacking, drooling prospect for the cronies who would be specially selected to purloin these veritable cash cows in power, auto, property, heavy equipment and utilities..
    Although the smokescreen merger was hatched some years back, the real action started last week on Monday, Nov 20, which for everyone’s convenience is the start of the merger timeline. I suspect, like everyone else in Kuala Lumpur, Permodalan Nasional Berhad Chairman Ahmad Sarji Abdul Hamid would have likened the bleak, monsoon-mad stormy weather lately to the reservations many right-thinking people have on the consolidation.
    There were several precursors to the merger – the maddeningly difficult Golden Hope-Island & Peninsular rationalisation exercise in 2003-2005, the word that Kalimullah Hassan, no matter how incredulous it sounds, was gearing up for a PNB chairmanship (that job may instead go to 2nd Finance Minister Nor Mohamed Yakcob, seen as the co-architect of the merger) and the strong one-year market chatter that Golden Hope and Guthrie was priming up for a takeover by Sime Darby.
    The motions switched to overdrive when Ahmad Sarji received a call from the Prime Minister’s office – an executive summon to meet up with Abdullah Ahmad Badawi.
    Off went Ahmad Sarji, perhaps with a pre-supposed notion that this was a routine summon to accept another routine directive that needs execution. But the former Chief Secretary to the Government, like executives of the trifecta companies, had no real inkling of the stunner that the PM was to dump. Whether he was stunned or not, Ahmad Sarji listened attentively to Abdullah as he laid out the impending coalescence that is now dancing with the subtlety of hissing pit viper.
    Ahmad Sarji played the situation with an admirably straight poker-face, never unmasking his emotion nor sentiment, even if he disapproved of the merger. Among the senior management of the three companies, he had made it known that if he had his way, he would not have allowed this merger on the faith that the trifecta companies can be major global players in their own right. Anyway, the timing and the swiftness of its unravelling sucks.
    No matter. The next day, on Tuesday the Nov 21, PNB chief executive Hamad Kama Piah Che Othman and his senior staff were summoned by Putrajaya to get the primer on the merger on how it would be prodded. Hamad Kama Piah was taken aback at how the merger sounded and looked. He unflatteringly made his resentment categorically known days after in the Press but it now appears contrived because PNB does not want to the exercise to be seen as a related party transaction.
    Then came the bombshell: on Wednesday, the Nov 22, the three chief executives of Sime Darby (Ahmad Zubir Murshid), Golden Hope (Sabri Ahmad) and Guthrie (Wahab Maskan) were summoned in a private meeting by CIMB CEO and the merger’s grand wizard Nazir Abdul Razak. Like the proverbial magician popping out a rabbit from a hat, Nazir brusquely told the three chief executives that their companies were going to be merged.
    Sabri and Wahab took the news stunned and thunderstruck – they knew of Sime Darby’s overture in wanting to eat up Golden Hope and Guthrie but the magnitude of the amalgamation was equivalent to the rudest bitch slap to their faces. Except for Ahmad Zubir, who may have taken Nazir’s pronouncement with the coolness of someone who knew what was coming.
    Months back when the Sime Darby takeover scuttlebutt was percolating, Ahmad Zubir privately hired merger and acquisition experts and human resources consultants to crunch the numbers for the big-ass merger. It would seem the cabal found in Ahmad Zubir (the younger of the three CEOs at 40ish) a soul-mate for the threesome, a corporate hack to smoothen things out during the heady corporate transition (executive pink slips, VSS, staff shedding etc.) and to placate opposition from directors of the three companies rebelling cantankerously against the merger.
    The merger plans, it would seem, were calculatingly pre-meditated. But as artful as the cabal are, they still haven’t figured out everything. One of the grievances that would be made public in due time is how the whole shebang unravelled unprofessionally and why far too many days were imposed in suspending shares trading.
    In the aftershock of the merger quake, grunts of disapproval, reservations and other misgivings from directors and senior management of the three companies began seeping out, private or otherwise. Sime Darby had their board of directors meeting almost immediately and any director, or for that matter, any senior executive who acted like a wet blanket during that meeting may be pushed to the sidelines, if not already shoved there.
    Their major concern is the realisation that the proud history and traditions of these three giants will be relegated to the gutters and trash of history, which won’t unnerve the decision-makers, the 4th floor cabal of punks and wannabes who probably never even set foot in an oil palm plantation. The only greenery they immerse themselves in was the colour of money.
    Ahmad Zubir is already positioning himself to lead the new company after Synergy Drive completes the transaction while fashioning Sime Darby as the lead company to manage the merged juggernaut.
    However, if the merger were to be guided professionally, it would be logical that Golden Hope take the lead, seeing that they have got the palm oil business covered in every conceivable angle – upstream, downstream, oleo-chemicals, bio-diesel, global outfits, R&D, sound management…the works. Their reach limited, Sime Darby has sizeably smaller hectarage but no global palm oil-related tentacles to speak of while Guthrie’s plantation business is pock-marked with problems in Indonesia.
    Now that I’ve elaborated the background of the merger, the focus should be to:
     Identify the vultures green-lighted to swoop on the non-plantation businesses and inherit cash cows (You can put your mortgage on companies linked to the SIL);
     Ensure that Golden Hope assumes primacy of the merger. Nazir’s pronouncement of a “new business direction” is bizarre when Golden Hope has already travelled that path. All Sime Darby and Guthrie need to do is just tag along;
     Whether the board of directors will accept Synergy Drive’s offer to buy out the shares at a 5% premium based on the stocks’ closing prices (I strongly doubt it. Seeing how the share prices are spiking higher and faster than premature ejaculation, Nazir will be compelled to revise the offer by at least 15-20% to meet the recommendation by merchant bankers assigned by the three companies to evaluate SD’s offer. Besides, minority shareholders like EPF and KWAP won’t stand for that 5%).

    ReplyDelete
  2. Anonymous8:26 pm

    No Bru, I think at that price tag, CIMB stands to make RM200 million.
    That Bru, is the M&A game. Not always good for the merged entities but always good for the arrangers, financiers, underwriters and placement agents.

    I don't believe this Najib's play. He was merely echoing his Elegent Silent boss who does not understand this intricate business deals.

    He did not even know that his son was doing business in the country.

    ReplyDelete
  3. Anonymous8:47 pm

    RM100 m or RM200 m, the money will got to Umno's kitty for the next General Elections. CIMB, ladies and gentleman, is your new Renong, the money corp for Umno when Daim was King. Taxpyers, why the long faces, lorh. Consider this national service lah and next GE vote BN again lorh.

    ReplyDelete
  4. Told you guyz this was a 'siphon dry' operation to shore up UMNO's war chest.

    NTR lied about the merger being a PNB initiative when it is now clear that CIMB set up the SPV. But then, CIMB could/would not have done so without the expressed consent from 'higher' authorities.

    Then NTR said "Criticise us", what happened next? NST/Utusan merger came about.

    Now NTR is needling RedDotCom about investment opportunities. Guess what? Sounds like a trade-off gambit to me. You give us some, we give you some. Like "Hey, RDC, we got the deal of the century brewing (sorry, bru. No pun intended). Want some?"

    Sometimes, we need to holler to be heard above the ambient noise. NTR's doing a lot of hollering lately, albeit, adding to the ambient noise.
    Stay focus, folks.

    ReplyDelete
  5. Anonymous11:29 pm

    Whatever analysis you can come out, for sure that small red dot island wil get its portion in the deal. Another Taksin in the making everyone?

    Hantu Gigi Jarang

    ReplyDelete
  6. Anonymous12:12 am

    Najib was nobody in the deal but an "announcer". He knows nut about the merit and demerit of the deal. He was basically forced to make the announcement. Even his little brother contradicted him on whose initiative the proposal was.

    Now, if something goes badly wrong and the proposed deal is aborted, who will look bad more? Najib and Nazir relationship on the deal is another not-so-nice thingy...a minus point for Najib.

    Whoever behind this deal, is sure has two objectives in mind! One is the lucrative spillovers, the other is Najib!

    Ahli UMNO Pahang

    ReplyDelete
  7. Anonymous12:28 am

    What a sad case, when we can have three global players with global class CEOs, somebody has the crookest idea to filch their (companies) assets (which belongs to people of Malaysia) and disguise it under the merger exercise.

    I just hope this deals does not get through and may Allah stop it if the people behind it had bad nawaitu.

    UMNO cannot continue to suck the wealth of the people and enriching its cronies this way. The overtayed PM and his power craze SIL need to be taught a lesson like what happened to Thaksin if they continue to ridicule the rakyat.

    These kind of corporate filching must stop. Nazir said as bankers, they are like chef who prepares the merger proposal for the three companies to digest it. Well in this case I think the three CEOs never had the opportunity to taste it with their tongue but were sholved direct down to their throats. What a sad case.

    What will they think of next?.....bet you, YTL and the speed train project. Their next focus is how to filch the KTM assets...the landbank in singapore which worth more than SGD4b (SGD 4,000,000,000.00)

    Anyway, lets not all these filching exercise impacted our already disturbed health, lets listen to this song in You Tube.

    Here's the link:
    http://www.youtube.com/watch?v=OqhHWWeR7uw

    Enjoy it.

    ReplyDelete
  8. Anonymous12:40 am

    Common sense please?
    This 'hadhari'fellah really don't know about economy,consolidation and merge.
    So who idea is it?
    SIL khannas..

    ReplyDelete
  9. chip heist a cool rm42-50mil. If caught sure get spanking and jail term. Palm Oil hesit, a cool rm100? And one gets a pat on the back and smoke cigar. NICE!

    ReplyDelete
  10. Brother Rocky,

    The Prime Minister's son and son-in-law have made their billions and now its the DPM's brother out to make billions. This is, after all, MALAYSIA, the land of the corrupt.

    ReplyDelete
  11. Anonymous1:26 am

    can someone go and ask TDM what his take is on this merger? It would be interesting to note his analysis of this so-called merger.

    cucuparit

    ReplyDelete
  12. Anonymous6:39 am

    First they came and raid the non-bumi's corporate assets under the guise of NEP - you know that 30% thingy and now it seems 60-70% is their target. I bet they could not chew on more than they can bite because the non-Bumi have learned to invest "smart" and not necessarily in Malaysia.

    Now they are going after what's left, GLC and Bumi corps alike are fair game.

    Now who is Bodoh, the one who vote for the govt or the one being voted?

    Malaysia is truly bodoh.

    VMY 2007 - No visa required, marriage certificate essential.

    ReplyDelete
  13. Anonymous7:37 am

    Is there a Suharto somewhere here in the making? The Indons are moving forwards but we seem to be moving backwards?

    ReplyDelete
  14. Anonymous8:20 am

    Bru,

    Merger is the easiet part. That's why we have M&A experts like CIMB.

    Merger can also be faked to give semblance of value.

    Merger can also be a rip-off like how ECM-Libra ripped-off Avenue Asset.

    But making a merged entity work is harder.

    After CIMB collects its cool RM200 -million fee and all the intemediaries make their pile and leave, Ahmad Sarji and Kama Piah will be left with a very big expensive "monster".

    They either make the monster work for the millions of PNB unit holders or the monster will eat them and the poor unit holders, this poster included.

    Pak Lah will blame Najib and Sarji for the fiasco, and we get screwed.

    So I hold all of them to account. And Allah is my witness.

    ReplyDelete
  15. Anonymous8:28 am

    I totally agreed with what fed up lorh said...
    RM100 m or RM200 m, the money will go to Umno's kitty for the next General Elections. CIMB, ladies and gentleman, is your new Renong, the money corp for Umno when Daim was King. Taxpyers, why the long faces, lorh. Consider this national service lah and next GE vote BN again lorh. "

    and that also what caused MAS to be bled dry.
    Consider also this STAR report "The national airline logged a NET PROFIT of 240.3 million ringgit (US$66.2 million, euro55 million) in the quarter ended Sept. 30, rebounding from a loss of 366.4 million ringgit in the same period a year earlier.....
    "We have BEATEN our financial targets for the first, second and third quarters for both our passenger and cargo businesses,'' chief executive Idris Jala told reporters.
    "The company has achieved more than 1 billion ringgit improvement to our bottom-line but we are cognizant of the fact that we are not out of the red yet.''
    The airline said its net profit for the July-September quarter included a ONE- OFF gain of 194 million ringgit (US$53.4 million, euro44.5 million) from the sale of properties and other payments as well as an operating profit of 73 million ringgit (US$20 million, euro16.8 million)."

    Beaten ? One off gain ? Yeah right … The sleeping rakyats have been beaten again and again especially from the balance of the MSS compensation (200 miilion ??) and MAS building sold to PNB for 110 million (what a coincidence!!!). Where is the other 90 millions ??? Got beaten again??

    ReplyDelete
  16. Congratulations Bandit...

    I knew there is more than just a typical merger rationale or CIMB attempting an Ethos-like fee.

    Two hints gave me that:

    1. When asked of the rationale, Pak Najib uncomfortably answered as Government decided.

    2. Then was Hamad's support but not green light comment

    The rationale said in the head-nodding mainstream papers were talking of the "deal" but it is not convincig enough technically.

    Its too huge a merger to be effective.

    It would be also interesting to see which Bank will finance this deals.

    Is Pak Lah going to allow our banking system to be financing M&A like priot to 97 financial crisis?

    If he is ultra conservative (more ignorant of financial mgmt actually) in his financial management, he wouldn't allow it.

    But hey ... he is gung-ho of US$105 billion SJER ... and now this mega corporate exercise. Clearly he is not going to deny SIL si Balau KJ and his gang of theives at Tingkat 4.

    I will concur with Bandit on his feeling that its Tingkat 4 at its obvious. Why?

    This is because what is being done here is similar to the Whitewash Procedure in SC's rule book that was applied by ECM Libra on the takeover of Avenue. By allowing all party to vote in the EGM, it allows the majority shareholders (which they can coerce)

    Rightfully it shouldn't but all saved becasue its SC to give the waivers and such.Shahrir and his PAC enquiry on ECM-Aveneu is quiet now.

    If I may anticipate, Sime Darby will go the "group" becasue it is slated for the Northern Corridor.

    Is there any journalist with the balls to ask Pak lah of this, after his yesterday reported "I had enough of this ...Complains, Promises and Criticism"? ... hehehe

    P/S Congrats to Rocky for the "fall on your lap" scoop

    ReplyDelete
  17. Anonymous10:58 am

    This is crazy to say the least. While FDI in Malaysia has declined by 14% and the so-called VSS is rampant among the private firms nowadays especially manufacturing companies and the acutely rising cost of living, ordinary people like us will go crazy in no time just thinking of how to cope with life....

    ReplyDelete
  18. Anonymous1:24 pm

    "seromban boy said...

    nowadays especially manufacturing companies and the acutely rising cost of living, ordinary people like us will go crazy in no time just thinking of how to cope with life...."

    So, shall we go "amok" & invoke people's power like in the Phillipine & Thailand?

    ReplyDelete
  19. Anonymous1:25 pm

    "seromban boy said...

    nowadays especially manufacturing companies and the acutely rising cost of living, ordinary people like us will go crazy in no time just thinking of how to cope with life...."

    So, shall we go "amok" & invoke people's power like in the Phillipine & Thailand?

    ReplyDelete
  20. Anonymous5:16 pm

    *TypicalProgrammer*

    Running amok might be toomuch. A peacefull demonstration will do. If they do one nearby you can bet my ass I will be there.

    ReplyDelete
  21. Anonymous10:14 pm

    Got this from NST (one day delayed wrt STAR) >>
    So many conflicting statements ... and the stock analyst played the spin further (afterall, the more people buy/sell, the more commission they make)
    So, the RAkyat got beaten again in all angle.
    "RESISTANCE IS FUTILE"

    >>It's clear skies again for MAS
    29 Nov 2006

    KUALA LUMPUR: The bleeding at Malaysia Airlines has been stanched, with the national carrier returning to profit in the third quarter.

    MAS’ favourable third quarter was largely due to the net one-off gain of RM194 million from the sale of its office building on Jalan Sultan Ismail and the Widespread Asset Unbundling compensation from the domestic rationalisation exercise.<<

    ReplyDelete
  22. Anonymous2:24 pm

    after the merger, pnb is to own approximately 45% of synergy drive. i haven't done the calculations myself but some corporate finance experts believe that currenly pnb owns over 60% (based on nta) of these three companies. if this is true, pnb, upon the merger loses about 15% of its holdings in these 3 companies. the question is who benefits from this??

    ReplyDelete
  23. Anonymous2:26 pm

    after the merger, pnb is to own approximately 45% of synergy drive. i haven't done the calculations myself but some corporate finance experts believe that currenly pnb owns over 60% (based on nta) of these three companies. if this is true, pnb, upon the merger would stand to lose more than 15% of its holdings in these 3 companies. the question is who benefits from this??

    ReplyDelete
  24. Anonymous1:43 pm

    this is called 'setting-yourself-up-to-lose-in-the -next-GE'.

    anwar must be laughing. he doesn't even to campaign as BN goes on a pre-GE suicidal streak systematically killing the public (read mainly malays in the kampung-kampung) confidence in them.

    ReplyDelete

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