Ming Pao in HK$3.4b merger

PUBLISHED : Tuesday, 24 April, 2007, 12:00am
UPDATED : Tuesday, 24 April, 2007, 12:00am

Share-swap deal gives publisher control of Malaysian papers

Ming Pao Enterprise Corp, the publisher of Chinese-language Ming Pao Daily News in Hong Kong, will merge with Malaysian-listed Sin Chew Media and Nanyang Press Holdings in a share swap worth HK$3.4 billion, according to a company announcement yesterday.

The post-merger Ming Pao shares will be listed on the Hong Kong and Kuala Lumpur stock markets and its daily circulation of newspapers will top a million copies.

The interest of Ming Pao shareholders will be diluted to 6.5 per cent in the new company from 27 per cent.

Ming Pao and its 62.83 per cent-owned magazine publishing arm, One Media Group, were suspended from trading last Friday pending the possible merger announcement. Both companies will resume trading today. Ming Pao shares closed at HK$1.90 last Thursday.

Sin Chew and Nanyang Press are owned by Ming Pao's chairman and largest shareholder Tiong Hiew King.

Ming Pao will issue 1.01 billion new shares of the post-merger Ming Pao at HK$2.70 each to acquire all 302 million issued shares in Sin Chew. The share-swap ratio is 3.36 post-merger shares for an existing Sin Chew share.

Total consideration for Sin Chew based on the issued price of HK$2.70 would be HK$2.7 billion and represents a 24 per cent premium to Sin Chew's existing market valuation of HK$2.17 billion based on its last closing price of 3.16 ringgit.

Ming Pao will also acquire loss-making Nanyang Press by issuing 261 million post-merger Ming Pao shares at HK$2.70 each.

The total consideration excluding its employees' options is HK$706 million, a 5.6 per cent discount to Nanyang's HK$746 million on the last trading day.

The price of HK$2.70 a share represents 16 times historic earnings, according to Ming Pao's 2006 audited accounts. It also represents a premium of 42 per cent to the closing price of HK$1.90 last Thursday.

Sin Chew made a net profit of 53.97 million ringgit (HK$123 million) for the year ended March 2006, while Nanyang Press made a 6.31 million ringgit loss in the same period. Ming Pao reported net profit of HK$16 million for the six months to September last year.

After the merger, the merged Ming Pao will hold 100 per cent of Sin Chew and Nanyang Press and 62.83 per cent of One Media Group.

Mr Tiong and his family will hold 54.95 per cent of Ming Pao.

Shares held by Ming Pao founder Louis Cha will be diluted to 2.41 per cent from 10 per cent before the merger. Dr Cha holds 40.46 million shares of Ming Pao.

Mr Tiong held 62.66 per cent of Ming Pao, 52.46 per cent of Sin Chew and 52.73 per cent of Nanyang Press before the share-swap arrangement.

The merger will give Ming Pao control of five newspapers, including Ming Pao Daily News and Sin Chew Daily with 15 editions, and 35 magazines in North America, Southeast Asia and Greater China.

On solid ground

Ming Pao's net profit for the six months to September 2006, in HK$: 16m