KUALA LUMPUR (Jan 11) – Shares of DRB-Hicom Bhd and MMC Corp Bhd, which are linked to tycoon Tan Sri Syed Mokhtar AlBukhary, fell among top decliners on Friday morning after DRB-Hicom denied speculation that its controlling shareholder plans to privatise the firm.
At 10.18 am today, DRB-Hicom was traded at RM2.68 with some 1.4 million shares done after falling as much as five sen or 2% to RM2.65 earlier.
MMC fell four sen or 1.5% to its intra-day low of RM2.66 at 10.19 am with about 77,000 shares transacted.
A dealer said the decline in DRB-Hicom follows clarification that the conglomerate with automotive, property, and financial services operations, has not received any privatisation notice from Syed Mokhtar.
"The catalyst prompting investors to sell DRB -Hicom shares is the news, "the dealer told over telephone on Friday.
The dealer said the decline in MMC could be due to the fact that Syed Mokhtar is also the controlling shareholder with a 52% stake in the diversified entity. MMC's businesses include port operations, power generation and construction.
Investors chased DRB-Hicom shares on Thursday, pushing the counter up as much as 6% to RM2.78 among top gainers and most actively-traded stocks on talk that the conglomerate could be privatised and delisted.
A news report, quoting sources, said Syed Mokhtar who controls DRB-Hicom through Etika Strategi Sdn Bhd's 56% stake in the company, plans to privatise the former at between RM3.50 and RM4 a share.
Bernama also reported that DRB-Hicom may list its automotive manufacturing and distribution arms, as part of a plan to create the "Asian Car" project. The plan may entail DRB-Hicom being delisted,
According to the report, existing shareholders of DRB-Hicom may be able to convert shares in the company into units in the proposed listed entities, and also be entitled to a cash distribution of between 50 sen and RM1 a share.
In response to queries by Bursa Malaysia, DRB-Hicom said Syed Mokhtar has not approached or notified the company on the privatisation of the firm.
But the company said the listing of its Proton distribution business to unlock the values of the merged entity comprising Proton Edar and EON Bhd is a possibility.
"However, it was not part of the plan to de-list DRB-Hicom. The proposal is still at very preliminary stage and the company will make the relevant announcements in accordance with Bursa Malaysia listing requirements," DRB-Hicom said.
Meanwhile, RHB Research Institute said a potential privatisation of DRB-Hicom makes investment sense because Syed Mokhtar already owns 56% of the firm.
In a note on Friday, RHB said the purchase of the remaining 44% stake in DRB-Hicom will cost the tycoon RM3.4 billion
"Even if no offer materialises, we continue to be positive on the longer-term fundamentals of the stock," said RHB, which has an "outperform" call and target price of RM3.50 for DRB-Hicom shares.