Value creation in the takeover of Amanah mutual Berhad by Amanah saham nasional berhad

Zulkifli, Im Xaxanuhani and Ibrahim, Khadijah Sairah (2008) Value creation in the takeover of Amanah mutual Berhad by Amanah saham nasional berhad. Masters thesis, University of Malaya.

[img] PDF
ASNB&AMB MASTER 4 June final 11[1].6.pdf

Download (1MB)


Amanah Saham Nasional Berhad (ASNB), a wholly-owned subsidiary of Permodalan Nasional Berhad (PNB) was incorporated on 22 May 1979, as part of the government’s objective under the New Economic Policy (NEP) to promote equity ownership in the corporate sector among the Malaysians, especially Bumiputera. ASNB has developed opportunities for Malaysians to participate in the creation and management of wealth through its unit trust products, which has been somewhat a successful special vehicle of the government to pool funds from individuals and mobilize them into performing corporate sectors through investments into sound private and public listed companies. Although ASNB has been the market leader in the unit trust industry with the control of more than 50% of the industry’s net asset value (NAV) in terms of the assets under management, the intensity of competition in the industry has seen the need for ASNB to grow. In order to strengthen its position in the marketplace and be better able to keep abreast with the challenges ahead in the light of market liberalization and globalization,one of the fastest ways to grow is through related mergers and acquisitions (M&A) or takeover. The main reason underpinning the takeover initiative of ASNB was to grow not only in size, but also revenues, profitability, productivity, capabilities, skills and expertise in its business operations and core competencies building. Amanah Mutual Berhad (AMB), formerly known as Mayban Unit Trusts Berhad (MUTB), was seen as the best possible suitor for this corporate strategy and that ASNB hoped to achieve value creation from the synergistic sharing of activities, technology and core competencies along the value chain leading to economies of scale and scope through this related takeover and integration of AMB with the company. While, value creation was expected to be achieved, the post-takeover integration proved to be slower than expected to enable the company to operationalize and realize the anticipated value. Therefore, this study aims to investigate not only the issues faced by ASNB in the posttakeover integration process, but also to evaluate the purchase consideration made for the takeover, the types of financing used, achievement of the motivation for the takeover and the value created post-takeover on a consolidated account. In terms of takeover settlement, the findings suggested that ASNB has made a value buy for AMB at the Net Tangible Asset (NTA) relative to the Discounted Cashflow (DCF)valuation indicating three (3) times premium of AMB’s NTA at the point of settlement in November 2006. On the back of excessive cash reserves, the takeover was internally funded via cash settlement. However, the optimal capital structure analysis suggested that a debt ratio of 20% would provide tax incentives to ASNB for better earnings reflection under the leveraging principle. ASNB, to a certain extent has partly achieved its takeover objectives in terms of business size, broader market penetration and wider market segments, but the slower integration process of relevant and redundant functional activities resulted in disability of achieving economies of scale post-takeover. The anticipated synergy value on a consolidated account was far from reaching the expectation of the management based on the results of the profitability analysis which indicated the erosions in net profit margin, return on assets (ROA) and return on equity (ROE) of ASNB in 2007. The lower consolidated ROE reflected lower shareholders’ value coming from the takeover. The findings of this study suggested the need for efficient and effective corrective measures moving forward so as to realign and redirect resources towards meeting the company’s initial motivations for the takeover.

Item Type: Thesis (Masters)
Uncontrolled Keywords: Value creation, Amanah Mutual Berhad, Permodalan Nasional Berhad (PNB), Mayban Unit Trusts Berhad
Subjects: H Social Sciences > HG Finance
Date Deposited: 19 Jul 2013 07:37
Last Modified: 19 Jul 2013 07:37

Actions (login required)

View Item View Item