Friday, September 24, 2010

Proposed disposal of numbers forecast operator Pan Malaysian Pools

Analysts have differing views on the potential buyers of Tanjong plc’s Pan Malaysian Pools Sdn Bhd (PMP), with some saying the two existing gaming players could potentially be the buyers while some contend the two firms will derive no synergy from buying PMP.

source of picture

Analysts said news of Tanjong wanting to sell off its gaming unit did not come as a surprise as the group had been wanting to hive off the unit. “It is hardly the kind of decision that companies make overnight. There has been market talk that Tanjong are looking to sell off its gaming unit,” an analyst said.

On Monday, StarBiz reported that Usaha Tegas Sdn Bhd (UT) was in the midst of finalising plans too sell PMP, post privatisation.

‘’It is only a question of time. UT is now busy finalising the funding of Tanjong’s privatisation. But once that is settled, gaming will be hived off as the focus is on the power business,’’ a banker familiar with the plans told StarBiz.

PMP operates the racing and numbers forecast totalisator businesses. For the financial year ended Jan 31 (FY10), its number forecast totalisator business posted an operating profit of RM234.8mil on revenue of RM730.8mil. Its racing totalisator business posted an operating loss of RM65.8mil in FY10.

A bank-backed analyst believes the potential buyer for PMP is “unlikely” to be the existing players.

She said a new player could emerge as the purchase would provide “little synergy” for existing players to buy. Adding more outlets would not really make a difference for the existing players as they were all established players, she said.

She reckons both Berjaya Sports Toto Bhd (BToto) and Magnum Corp Sdn Bhd have the resources to purchase PMP.

As of April 30, BToto had deposits, cash and bank balances of RM257.2mil. Multi-Purpose Holdings Bhd unit Magnum had cash and bank balances of RM514.3mil as at June 30.

The domestic gaming industry is dominated by BToto, Magnum and PMP. There are also several other players in Sabah and Sarawak.

All three major players could not be reached for comments.

Another analyst said the gaming industry was highly regulated and that potential buyers needed to get approval from the Finance Ministry for any acquisition.

He said the Government might like to consolidate the industry. But he said he was unsure whether the sale would be via tender or negotiation.

He said PMP had the least number of branches and games compared with BToto and Magnum but noted that PMP’s cashflow was still good.

He reckons that if any of the existing players are interested, they would be after PMP’s outlets given that the Government had stop issuing licences for them. And if new players were involved, they would want to introduce new games and compete against BToto and Magnum, he said.

The analyst said the hiving off exercise would not affect the privatisation of Tanjong as UT had already offered to take Tanjong private at RM21.80 cash per share.

“PMP is famous for its three-digit (3D) games and horse racing is not an ‘in’ thing. Nevertheless, it is a cash generating business,” he said.

He said the gaming business when disposed of could reduce the borrowing for the privatisation exercise.

In another development, Tanjong Capital Sdn Bhd told Bursa Malaysia that its offer to acquire all the voting shares in Tanjong at a cash price of RM21.80 per share became unconditional yesterday.

Tanjong Capital said it had, by virtue of having received , before the close of its offer to take Tanjong private, valid acceptances in respect of its offer, acquired or unconditionally contracted to acquire not less than 90% of the offer shares and not less than 90% of the voting rights attached to the offer shares.

Tanjong Capital had highlighted it did not intend to maintain the listing status of Tanjong on Bursa if the 90% acceptance condition was achieved.

Sourced from StarBiz