BStead/ESSO.. dated April 2011

What’s Up? … dated April 2011

Sources say BStead and its parent LTAT are believed to be eyeing Exxomobil Intl Holdings Inc’s 65% stake in Esso Malaysia Bhd.

It is learnt that Exxonmobil’s stake is up for sake as the oil major is looking to exit its operations in Malaysia , given the relatively low margins here and its preference to focus on exploration and production of oil.

It is not known what price the stake will be transacted.

The value in ESSO is the franchise value of its chain of petrol stations. Esso has a net asset value of rm2.81 per share as at end Dec 31, 2010.

BStead could at a later stage, after its takeover of ESSO, inject BStead Petroleum Marketing Sdn Bhd, which markets and distributes petroleum products through the BH Petrol china of petrol stations.

BStead holds a 70% stake in BPM while the remaining 30% is held by LTAT, which holds a 59.28% stake in BStead.

Esso clarified that it was not aware of any plans to take it private. Nonetheless, its share price continued going north.

The transactions if go through could expand BStead’s network of petrol kiosks. Additionally, Esso has a range of its own lubricants, engine and other speciality products and a refinery in Port Dickson.

Esso has come rm95 million in cash and cash equivalents as at end 2010 while total borrowings were rm616.3 million.

This would be the first time BStead is strengthening its smaller divisions via acquisitions. It had done so through Pharmaniaga. BStead had said it will focus on inorganic growth to provide shareholder value.

BStead had cash and cash equivalents of rm399 million while borrowings of about rm3 billion as at 31, Dec 2010. Net operating cash flow of rm174 million in FY2010.