OSK Research is maintaining a Buy on KENCANA PETROLEUM BHD [] with an unchanged fair value of RM3.17 given the longer term potential following a merger with SapuraCrest Petroleum.
It said on Tuesday, July 12 Kencana announced that the company has received a letter from Integral Key Sdn Bhd (IKSB) to acquire its entire business and undertakings, including its assets and liabilities for RM5.98 billion or equivalent RM3 a share.
Concurrently, IKSB will also acquire the entire assets and liabilities of Sapura Crest Petroleum for an equivalent of RM4.60 per share.
OSK Research said IKSB will then take over the listing status of one of the companies while Kencana and SapCrest will distribute the cash and IKSB shares back to their respective shareholders
“We view the merger between Kencana and SapCrest positively as we see both their businesses complementing one another despite minor duplication in their less important business segments,” it said.
It explained that one Kencana share would translate into 1.26 IKSB shares and 48 sen cash
“While the asset acquisition prices Kencana at a reference price of RM3, that should in no way be viewed as a cap,” it said.
“In the O&G sector, as long as management is credible, bigger is usually better so we are viewing the deal as mildly positive,” it said.
No comments:
Post a Comment