Aurora Mulia ups its stake in Media Prima to 31.22%

by SHAZNI ONG/ graphic by MZUKRI

AURORA Mulia Sdn Bhd has bought a further 7.9% stake in Media Prima Bhd, subsequently raising its stake in the company to 31.22%, a shy of 1.78% to trigger a mandatory general offer (MGO).

According to a Bursa filing yesterday, Aurora bought the stake last Friday via a direct interest business transaction, likely from Umno-related Altima Inc, the fifth time the company has done since July this year.

Assuming the acquisition was done at 60 sen per share, the block would have cost Aurora Mulia some RM53 million for the 88.29 million shares bought.

Aurora Mulia, which has Syed Danial Syed Mokhtar Shah as one of the named directors, has spent more than RM207 million to acquire the 31.22% stake at 60 sen a share in Media Prima to date. Syed Danial is the son of businessman Tan Sri Syed Mokhtar Albukhary.

Other key shareholders in Media Prima now are Mitsubishi UFJ Financial Group Inc with a 12.84% interest and the Employees Provident Fund with an 11.58% stake.

Altima Inc, had held a 7.96% stake, while London-based investment management firm, Edgbaston Investment Partners LLP, is the other major shareholder with a 4.79% stake in the media group, according to Bloomberg.

Media Prima’s share price closed at 47 sen yesterday, valuing the company at RM521.32 million.

Media Prima was in the red for its second quarter ended June 30 this year (2Q19) as growth in the home shopping business failed to offset the decline from traditional revenue streams.

The integrated media group fell to a net loss of RM8.82 million for the quarter against a RM31.95 million net profit in 2Q18 due to lower group turnover which declined 13.3% year-on-year (YoY) to RM296.77 million.

Net loss for the first half of 2019 (1H19) amounted to RM49.23 million while revenue came in 14% lower YoY at RM535.87 million.

A RM45.3 million gain from a share sale was also recognised in 1H18, thus, resulting in a higher base for that period when read against 1H19.

Excluding the one-off gain, the media group would have posted a loss after tax of RM36.6 million, its exchange filing noted last month.

Earlier, CGS-CIMB Research in a note dated Sept 19 said it remains to be seen what Aurora Mulia has in store for Media Prima, so much that the for

mer is willing to pay a 28% premium to its market price, raising its stake in the integrated media group to 23.3% recently.

CGS-CIMB Research noted that since Aurora Mulia first emerged as a substantial shareholder in Media Prima, neither company has gone public with Aurora Mulia’s plans, such as value-enhancing corporate exercises or strategic changes to turn the media group profitable.

“The only clue left by Media Prima’s management was from the group’s 1H19 results briefing on Aug 22: It conceded that “something needs to be done” with its 98%owned news producer The New Straits Times Press (M) Bhd (NSTP). NSTP accounted for more than twothirds of Media Prima’s 1H19 core net loss of RM51.6 million.

“Whatever that “something” is, management ruled out that it would close down NSTP’s print operations” the research house said.

CGS-CIMB Research said Media Prima’s management conveyed its scepticism with Aurora Mulia triggering an MGO in the future.

The acquirer and its parties acting in concert would need to either hit a minimum 33% to 50% stake threshold or be in a position to control the composition of a majority of the board of directors of the company to move forward with an MGO.

CGS-CIMB Research maintained its “Reduce” call on Media Prima pending concrete turnaround plans or an MGO.

It had a target price of 38 sen for Media Prima with a 20% discount to its FY20F (forecast) price-to-book value ratio