MISC downgraded, may need RM2.9bil for 40pct Yinson stake [WATCH]

KUALA LUMPUR: MISC Bhd may need to spend up to RM2.9 billion to acquire a 40% stake in Yinson Holdings Bhd, according to CGS International Securities Malaysia Sdn Bhd. This estimate is based on a hypothetical cash privatisation price of RM2.50 per Yinson share, which is viewed as more likely than the reported RM2.35. The firm downgraded MISC to "Reduce" after reports emerged of a consortium formed by Petronas, MISC, the Employees Provident Fund (EPF), and Yinson's Lim family to take Yinson private.

Assuming the Lim family raises its stake to 40% and EPF reaches 20%, MISC would retain the remaining 40%. CGS International calculated that the Lim family would need RM1 billion and EPF would require RM214 million to achieve these percentages. MISC would then need about RM2.9 billion to acquire the remaining 40% at RM2.50 per share.

However, this all-cash acquisition is considered unlikely, as it would consume nearly 40% of MISC's RM7.2 billion cash balance as of June 30, 2026. Instead, MISC could potentially transfer some of its offshore business unit (OBU) assets to Yinson in exchange for new Yinson shares. In this scenario, the Lim family would need RM3 billion in cash and EPF RM1.2 billion to reach 40% and 20% stakes, respectively.

Despite a strong Q2 FY26 performance for MISC, driven mainly by AET, CGS International remains cautious about the potential Yinson deal and its impact on MISC's share price. Key concerns include Yinson's high gearing, costly convertible preference shares, and slow FPSO order progress. The research house believes MISC might prefer to hold an associate stake in Yinson to avoid consolidating the latter's debt.