STRATEGY - A merger with EXCL will result in a tender offer
Written by Arief Putra
11 June 2024
FREN's share price has recently plunged by over 50% due to two main factors: (1) On June 3rd, 2024, the Indonesia Stock Exchange (IDX) classified FREN as a Full Call Auction (FCA); (2) Retail investors are concerned about increased competition following the commercial launch of Starlink in the country. We anticipate the merger between FREN and XL Axiata (EXCL) will occur this year. Both companies announced on May 15, 2024, that they had signed a non-binding Memorandum of Understanding (MoU) regarding the merger plan. Stock plunge creates a buying opportunity If the merger proceeds, it is predicted that both FREN and EXCL will independently announce tender offers for dissenting shareholders who oppose the merger plans, after that the companies will proceed with the merger. We predict the tender offer prices will be Rp50/s (79% upside) for FREN and Rp3,500/s (57% upside) for EXCL.
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