The recent privatization announcement involving yet another sector, number forecast operator (NFO), has created some excitements since the stock market took the plunge taking the cue from U.S. continuous sub-prime worries. Magnum Corp Berhad, the oldest NFO in Malaysia is set to be taken private by its largest shareholder Multi-Purpose Holdings Berhad (KLSE: MPHB, stock-code 3859) which holds about 55.54 percent in Magnum.
Under the proposed deal, MPHB together with private equity firm CVC Asia Pacific Ltd will form a special purpose vehicle (SPV) to take Magnum private at RM3.45 per share or RM4.9 billion for the whole exercise. At RM3.45 Magnum was valued at a P/E ratio of 21.5 times and book value of 4.2 times based on its balance sheet as of Sept 30. MPHB and CVC will hold 51% and 49% equity interest respectively in the SPV; the SPV will pay out some RM4.9bil – RM2.7bil to MPHB and the remaining RM2.2bil to other shareholders.
While there’re three main 4D players or NFOs in the Malaysian market, Berjaya Sports Toto Berhad (KLSE: BJTOTO, stock-code 1562) has the most lotto games and outlets in the country while the other two players, Magnum Corp Bhd and Tanjong plc.only offer 4D games. Magnum which started operation in 1969 has followers since then and it was said that gamblers who bet their luck with Magnum has higher chances of striking, though it’s not proven. But old timers are mostly Magnum’s loyalist.
With Magnum set to be delisted from Kuala Lumpur Stock Exchange, logically the attention from investors would be diverted to BJTOTO. It would be interesting to see if Vincent Tan plans to adopt similar approach in taking his cash-cow private.
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