The Straits Times, March 16, 2010

Ananda Krishnan to acquire public's 27% stake in buyout of satellite TV operator

By Leslie Lopez, Senior Regional Correspondent

KUALA LUMPUR: Tycoon Ananda Krishnan is set to privatise his publicly listed satellite television operator Astro All Asia Networks in an RM8.1 billion (S$3.4 billion) buyout that will rank as one of the region's largest corporate transactions this year.

Under the proposed deal, the Ananda-controlled private investment unit Usaha Tegas and its partners will pay RM4.20 for each Astro share they do not already own in the privatisation plan which was approved over the weekend, bankers close to the situation told The Straits Times.

The buyout price represents a slight premium to the RM4.06 valuation when the company was listed in October 2003.

Shares of the company rose eight sen to RM3.56 apiece at the midday break yesterday before Astro requested that trading be suspended pending an announcement tomorrow.

The privatisation deal represents a slight modification of an earlier plan The Straits Times reported on in mid-2009, which called for the privatisation of Astro's fledgling international business, while retaining the company's listing to house its profitable domestic operations.

Bankers familiar with the situation said that members of the Usaha Tegas board met last Saturday and weighed several options before deciding to take the company private.

The planned privatisation of Astro mirrors the corporate strategy Mr Ananda employed in Maxis, the country's largest mobile telecommunications company which he took private in 2007.

The 71-year-old Mr Ananda, who is ranked among Asia's top three richest tycoons, relisted the telco's Malaysian operations late last year to raise as much as RM12 billion to help finance its Indian and Indonesian businesses.

Bankers believe that Astro's Malaysian operations will be relisted in the next two years to fund the company's India and China operations.

Over the last decade, Mr Ananda has emerged as a powerful force in the region's multimedia sector.

Astro, which has invested over RM1 billion to develop its own content for the region's large Malay-speaking population, beams its services to more than three million households now and bankers say the company's customer base could hit 3.5 million in the next three years.

But its overseas investments have been troublesome. In particular, Astro's foray into Indonesia in a joint venture with the powerful Lippo Group was a disaster after both parties fell out over how to manage the pay-TV business.

Astro, which was forced to make provisions of over RM1 billion for its investment in the Indonesian venture, secured a slight reprieve this month when the Singapore International Arbitration Centre awarded the company US$230 million (S$321 million) in damages in the fallout with the Lippo Group.

But it could be a long time before the Malaysian company receives any payment on the award, which is likely to be contested in the Indonesian courts, bankers said.

Astro has 1.934 billion shares on issue. Mr Ananda's Usaha Tegas controls a commanding 43 per cent interest; Khazanah Holdings, the Malaysian state investment arm modelled along Temasek, holds 22 per cent; and ethnic Malay foundations control 8 per cent.

Bankers said that financing arrangements to acquire the 27 per cent equity stake held by the public under the buyout plan are being finalised.

ljlopez@sph.com.sg