Malaysia’s Maxis pays Rs. 32 b for SLT’s 35% stake of Japan’s NTT

Single largest transaction in the history of Colombo bourse triggers Takeovers and Mergers Code

Ending a year long wait, Malaysia’s Maxi’s yesterday bought 35.19% stake in Sri Lanka Telecom (SLT) for a staggering Rs. 32 billion from Japan’s NTT Communication Corporation, in what was Colombo bourse’s single largest deal and triggering the Takeovers and Mergers Code in the process.

Global Telecommunications Holdings N.V. (GTH), a wholly-owned subsidiary of Usaha Tegas Sdn Bhd (UT), a Malaysia based investment holding company, bought 635,076,318 shares representing 35.19% of SLT at Rs. 50.50 per share from NTT. The price paid was above market expectations of Rs. 42 and 45 while the SLT share closed at Rs. 48, up Rs. 6.75. The deal, with selling broker being DFCC Stockbrokers and CT Smith as buying broker, was done at Rs. 9.25 or 22% higher from yesterday’s closing.

Maxi’s interest also propelled the national telecom carrier to be the second highest stock in terms of market capitalisation beating premier blue chip JKH but still behind leading mobile telecom firm Dialog.

The previous highest turnover at CSE was Rs. 6.7 billion recorded on May 17, 2007. Deal on SLT also boosted the market with All Share Price Index up by 70 points (2.75%) and the Milanka Price Index gaining by 128.83 points or 4.1%.

As a result of this acquisition, GTH will be required to undertake a Mandatory General Offer for the remaining shares of SLT which it does not already hold. An offer document containing all details of the offer will be sent to shareholders in due course.

UT is ultimately controlled by the trustee of a discretionary trust, the beneficiaries of which are members of the family of Ananda Krishnan Tatparanandam and foundations including those for charitable purposes.

In a statement the Board of GTH views the investment in SLT to be a strategic investment and looks forward to working with the other shareholders of the Company, including the Government of Sri Lanka and government related and other Sri Lankan institutions, to further grow the company and enhance shareholder value.

GTH, through common ownership, is affiliated to Maxis Communications Berhad which is regarded as one of the leading telecommunication service providers in Asia with operations in Malaysia, India and Indonesia. GTH and UT will commit resources to support the Board and management of SLT to create additional opportunities for its employees and to achieve the overall objectives of the company.

“The investment in SLT, which builds on the historical, cultural and trading relations between Sri Lanka and Malaysia, is the largest single transaction on the Colombo Stock Exchange, and reflects confidence in the long term prospects of the Sri Lankan economy and that of the telecommunications sector,” the company said.

Usaha Tegas Sdn Bhd is an investment holding company with significant and controlling interests in several entities involved in telecommunications, broadcasting and media, leisure and entertainment, energy and property development and ownership - including Maxis Communications Berhad, Astro All Asia Networks plc, Powertek Berhad and Overseas Union Enterprise Limited among others. UT is based in Kuala Lumpur, Malaysia while its investment and business interests are held both within and outside Malaysia.