MEDIA PRIMA OFFERS TO BUY NEW STRAITS TIMES

       Media Prima, Malaysia's biggest publicly traded publisher, offered to buy out the country's oldest newspaper group at a discount to its share price.
       Media Prima is offering one new share for each held in New Straits Times Press, known as NSTP, valuing each share at 2 ringgit (Bt20).
       In addition, the newspaper group's shareholders will get one free warrant for every five shares they exchange. This represents a 19 per cent discount to NSTP's last traded price of 2.46 ringgit on Thursday.
       Media Prima's managing director Amrin Awaluddin said the offer is "fair' based on NSTP's average share price over the past year, and described as "speculative" a recent surge in the stock.
       The offer values the transaction at about 246 million ringgit, based on Bloomberg News calculations of the number of NSTP shares not owned by Media prima.
       The offer ends more than two months of speculation that led to a 65-per-cent surge in NSTP's stock price since August 5, when the company announced that its main shareholders were considering options such as privatisation to boost shareholder value.
       NSTP said in a separate statement at the weekend that its board does not intend to seek any alternative offers.
       "Under the proposed transaction, the enlarged media entity will have the potential to emerge as one of the largest media groups in Malaysia in terms of sales and total shareholders' funds," Amrin told reporters in Kuala Lumpur yesterday.
       The buyout would help Media Prima, which controls four television stations in Malaysia, add earnings from the New Straits Times, Berita Harian, and Harian Metro newspapers as advertising income rebounds, Sharizan Rosely, an analyst at CIMB Investment Bank, wrote in a report before the announcement.
       Earnings at New Straits Times will increase as companies spend more on newspaper advertising, said Sharizan, who kept a "neutral" rating on the stock pending the offer details.
       The offer will become unconditional once Media Prima's stake hits 51 per cent, after which it will proceed to de-list NSTP, Amrin said.
       Media Prima already owns 43.3 per cent of NSTP, according to data compiled by Bloomberg.
       Amrin expects to complete the buyout by the end of the year, including the de-listing of NSTP.
       Media Prima wants to make NSTP a subsidiary, instead of an associate, so it can consolidate its earnings, he said.
       The acquisition would boost Media Prima's annual revenue to more than 1 billion ringgit and profit to more than 140 million ringgit once the companies' finances are consolidated, Media Prima said in a statement.
       To finance its working capital and investments, Media Prima also intends to sell 150 million ringgit of bonds attached with 50 million warrants that are convertible into shares in the consolidated group.
       Maybank Investment Bank raised its recommendation on Malaysia's media industry last month to "neutral" from "underweight" following a rebound in advertising income and consumer confidence.
       Advertising spending in newspapers increased 6 per cent to 291.2 million ringgit in July from a year earlier, ending monthly declines that started in October, Maybank wrote in September.
       Television and radio advertising expenditure rose 20 per cent in July, according to the report.
       Malaysia's economy may shrink less than previously forecast this year amid signs of a global recovery from the worst recession since the 1930s, the Malaysian Institute of Economic Research said October 14.
       Media Prima and NSTP shares were suspended from trading in Kuala Lumpur yesterday, and will resume on Monday.

       The buy-out would help Media prima, which controls four television stations in Malaysia, add earnings from three newspapers as advertising income rebounds.