PLUS Expressways Bhd (Nov 10, RM4.44) Unrated at RM4.40 with a target price of RM4.60: PLUS Expressways Bhd announced on Tuesday that it had received a revised offer letter from UEM Group and the Employees Provident Fund that would supersede the earlier letter dated Oct 15. PLUS’ board of directors has resolved to accept the revised offer for a total consideration of RM23 billion.

We note that the salient terms and conditions of the revised offer remain largely unchanged from the earlier offer. The purchase consideration remains at RM23 billion, or RM4.60 per share for all the group’s business undertakings. The proceeds will be distributed to minority shareholders via a special dividend, capital reduction and repayment exercise if the offer is successful.

Likewise, the revised offer is subject to fulfilment of certain conditions precedent, including the approval of PLUS’ shareholders, creditors and the regulatory authorities. The conditions and precedents will be satisfied within eight months from the acceptance of the offer. Completion of the privatisation will also be subject to a confirmation from the joint offerors within four months from the expiry of the condition period.

We would like to highlight that the revised offer contains a clause pertaining to competing offers. PLUS will have the right to evaluate any competing offers and table them together with the revised offer to shareholders as long as shareholders’ approval of the revised offer has yet to be obtained.

It was earlier reported that Asas Serba intended to submit a competing offer, which has yet to materialise. We are not optimistic that a proposal by Asas Serba will be successful. This because its higher cost of equity will impair its ability to come up with a better offer price and at the same time scrap all future toll hikes.

We recommend that investors accept the (revised) offer (from UEM Group and EPF) as the offer price is above our previous target price of RM4.36 prior to the takeover offer and PLUS’ historical share price since listing.