By now, you would have probably heard the news buzzing around surrounding the potential buyout for M1 takeover with two of its largest shareholder Keppel T&T which owns 19.3% and SPH which owns 13.5% dealing with a potential buyer on the cards. 

There's not much details on the news that have been shared and I can understand why investors are eager to follow up on the story given that this feels like dejavu all over again. In early last year, the 3 big shareholders, namely Axiata, Keppel T&T and SPH went through a similar strategy review when the shares were trading back then around $2.15. Unfortunately, the deal seems to be off and from the way I read the deal, it seems that Axiata has not agreed to the selling while the latter two has preference over divesting their non-core assets. 

In a similar statement made by Axiata yesterday (original script below), it appears that Keppel and SPH decide to proceed ahead with the review given that a successful deal with the two would mean that the acquirer would own a shareholding of above 30%, which would trigger a mandatory GO deal. 

The threshold for triggering a mandatory GO for a listed company in Singapore is when a person acquires shares resulting in him or his parties owning 30% or more of the listed company's voting rights. 

The offer price to the rest of the shareholder must be at least the highest price paid by the acquirer during the offer period or if after the offer period, then the acquirer must increase the offer price to the price paid by the acquirer. 

The minimum acceptance condition must be approved by at least 75% of the rest of the shareholders based on their voting shares. This is the reason why Axiata plays such an important role here because it owns 28.7% of M1 and my understanding is the deal could be off if Axiata backed off from the strategic review once again. This is the problem when you have so many different parties as part of your big shareholders. 

For M1 to continue to remain listed on the market, it must at least retain 10% or more of their voting shares to be held by the public. 

This could go down to be quite tricky for minority shareholders. 

It appears that to me Keppel T&T is interested to buy up the stakes of SPH and they would make a GO for the rest of the shareholders.

Either that scenario will happen or Keppel and SPH are trying to divest their shares in M1 as they have previously said they wanted to focus on their core areas. For Axiata however, the shareholding in M1 seems to be key to them given it gives them recurring income as part of the associates and from the reports I read, it appears that they are valuing M1 at the valuation of $2/share in their books.

Hence, I believe this is a key critical price for the deal should it go through. 

Thanks for reading.