Khazanah sells Pos Malaysia stake to DRB-HICOM

Khazanah Nasional Berhad – the Malaysian government’s investment arm – has announced it has sold its 32.21% stake in Pos Malaysia to DRB-HICOM.

The strategic divestment was made following “a rigorous selection process” that would “ensure that the new shareholder will be able to bring POS to the next level of growth”.

DRB-HICOM will pay RM 3.60 (EUR 1.41) per share, or RM 622.79m (141.2m) in total, Khazanah confirmed.

A statement said: “The offer price of RM 3.60 per share is subject to the modification of the Special Rights Redeemable Preference Share in POS (“Special Share”) held by minister of finance (MoF). This modification inter alia includes the reservation to appoint up to two Board members in POS; and the removal of rights to appoint the chairman and managing director of POS and fix their respective remunerations such that these become matters for determination by the Board of Directors of POS.

“This condition precedent is not within Khazanah’s control, as it is the sole prerogative of MoF Inc to make any modification on the Special Share.

“The conditional offer price is also subject to the variation in the use of 16 plots of identified lands owned by the Federal Lands Commissioner (FLC) and leased to POS. The current terms of the lease allows for only postal services use, while the variation provides for the inclusion of commercial use, over and above the mandatory postal use. In the event the variation does not happen by 31 December 2011, DRB-HICOM will be refunded 10 sen per share or RM 17.30m”.

Khazanah said it “adopted a robust strategic divestment process which involved an open bidding process and a merit-based and transparent selection process”. The process was conducted in two stages – the first stage involved addressing key aspects of POS’s macro business and regulatory environments, while the second stage revolved around the restricted tender process, it added.

Khazanah’s managing director, Tan Sri Dato’ Azman Haji Mokhtar, said: “DRB-HICOM was chosen based on their overall bid, which offers not only a defined strategy but also an executable business plan and an acceptable offer price. Their proposed strategy and business plan in turn provides an effective platform for POS’s growth, if adopted by the Board of POS as a whole.

“There was a fit and proper test of the new majority shareholder which includes promoting the sustainable development of the Universal Service Obligations (USO), as well as the commitment to retain existing staff in their business plan.”

The commitment to fulfill the social obligations under the USO (as required under the Postal Services Act, 1991) is crucial as postal services have an impact on the Rakyat, especially for those residing in remote or rural areas, a statement said.

Tan Sri Azman concluded: “As a responsible seller to stakeholders including minorities and the Rakyat, our emphasis on business strategies and credibility of the bidders was to ensure that the successful bidder, via the Board members they intend to proportionately install with their 32% stake, have a robust business plan to both deliver on their USO and unlock value and for them to discuss at the POS Board.”

With more than 60 subsidiaries, associate companies and equal joint ventures, DRB-HICOM describes itself as one of Malaysia’s leading companies “playing an integral role in the nation’s road to industrialisation”.