DiGi.Com Bhd has signed a conditional share purchase agreement (SPA) with Axiata Group Bhd as part of the prior-announced proposed merger of telecommunications operations between Celcom Axiata Bhd (Celcom) and Digi Telecommunications Sdn Bhd (DiGi).
This signing follows the satisfactory completion of due diligence processes, allowing the parties to now move into the next phase of the proposed transaction.
The merger of Celcom and DiGi will result in Axiata receiving newly issued shares in DiGi and a cash consideration of RM1.7 bil from DiGi as new debt in the merged entity.
As part of an ownership equalisation in DiGi under the terms of the merger, Axiata will also receive close to RM300 mil from DiGi’s largest shareholder Telenor Asia.
At completion of the merger exercise, Axiata and Telenor will hold equal ownership of 33.1% each in the new merged company (MergeCo) which will be named Celcom Digi Bhd which shall continue to be listed on Bursa Malaysia.
“The completion of the proposed transaction will be subject to approval by Axiata and Digi shareholders, receipt of regulatory approvals, and other customary terms and conditions,” DiGi pointed out in a statement.
“The new merged company will provide better network quality and coverage and have greater scale to invest, drive 5G solutions, catalyse new growth opportunities for large enterprises and SMEs, and attract and partner global digital giants in support of JENDELA (National Digital Network) and MyDigital aspirations.”
Moreover, the new merged company will also leverage combined economies of scale while creating benefits through strengthening core distribution, delivering improved network operations, and realising efficiencies from operational activities.
“DiGi has been informed that as part of this announcement, Axiata and Telenor aspire for the MergeCo to invest – subject to relevant approvals – up to RM250 mil over five years in building a world-class innovation centre in Kuala Lumpur,” noted DiGi.
“Axiata and Telenor had also announced that initial estimates indicate synergies of around RM8 bil on a net present value basis.”
At the close of today’s morning session, DiGi was up 13 sen or 3.11% to RM4.31 with 5.9 million shares traded, thus valuing the telco at RM33.51 bil, while Axiata was down 6 sen or 1.47% to RM4.03 with 1.23 million shares traded, thus giving it a market capitalisation of RM36.97 bil. – June 21, 2021
