NSTP And UTUSAN – Another Merger Again?

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Nov 29 2006
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So, another confirmed merger rumor after the super-merger of Malaysia’s largest palm oil producers – Kumpulan Guthrie Berhad (GUTHRIE : stock-code 3131), Sime Darby Berhad (SIME : stock-code 4197) and Golden Hope Plantations Berhad (GHOPE : stock-code 1953) last week.

This round the candidates are New Straits Times Press Berhad (NSTP : stock-code 3999) and Utusan Melayu (Malaysia) Berhad (UTUSAN : stock-code 5754) after months of rumor of the said merger, which will create the country’s largest media group. Similar to the palm oil producers plan, this merger will see the de-listing of both NSTP and Utusan and shareholders will be offered new shares in a new entity ( Synergy Drive Two? ).

Media Prima Bhd (MEDIA : stock-code 4502), which holds 32.94% of NSTP, and UMNO (the ruling party), which owns 50.46% of Utusan will jointly control the new entity. NSTP’s NTA per share at Sept 30, 2006 was RM4.12 and Utusan Melayu’s amounted to RM2.06 at end-July 2006. NSTP and Utusan have a paid-up capital of RM217.23 million and RM109.22 million respectively. Today, 29-Nov-2006 after closing, MEDIA added RM 0.06 to RM 2.53, NSTP added RM 0.25 to RM 2.69 and Utusan gained RM 0.23 to RM 1.58.

NSTP posted a net profit of RM6.4 million in the third quarter ended Sept 30, 2006 while Utusan reported a net profit of RM2.37 million for the second quarter ended June 2006. Both companies are making losses.

NSTP is on the brink of collapse due to it’s declining of readership with the circulation of about 150,000 copies per day only. NSTP estimated losses for the financial year ending Dec 31, 2006 of RM 4.6 million.

Star Publications (Malaysia) Berhad (STAR : stock-code 6084) which is closely linked to another component of ruling-government MCA and TheSun (TheSun), a subsidiary of Nexnews Berhad (stock-code 6025) are the main contender for the English newspaper readers. TheSun is provided free of charge, surviving on advertisement alone.

What is it that the government sees that prompted the multi-mergers one after another? Could it be something related to FTA (Free Trade Agreements) which I think the government will sign ultimately because of the huge market opportunities? Maybe the reason is purely political as the current government is moving into its’ fourth years of administration?

I would be happy if the government finally woke up and realized that the world business has evolved and the full-blown “Globalization” is shaping fast. The question remains on the seriousness of the government in preparing for the local business corporation to compete with the big-boy comes the free-market soon.

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