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    Southeast Asia
     Apr 26, 2007
Chinese newspaper groups merge in Malaysia

KUALA LUMPUR - The merger of Malaysia's Chinese-language publishing groups - Sin Chew Media Corp Bhd, Nanyang Press Holdings Bhd and Ming Pao Enterprise Corp Ltd - is on course to be completed next February.

The three publishers this week signed the agreement on the merger, which will create the largest Chinese-language media company outside China, with a market capitalization of more than RM1 billion (US$292 million).

The merger represents a landmark for the Malaysian capital



market, as it is the first dual primary listing for a Malaysian company listed on both the Bursa Malaysia and Hong Kong Stock Exchange.

Sin Chew executive director Rita Sim predicted that the merged media entity will see organic growth not only in traditional newspaper circulation but also from new media platforms, which are expected to be a significant contributor to the group's revenue over the next three to five years.

"The contribution from the multimedia segment to revenue now is less than 5%. The group will be putting a lot of resources into the new media platform[s]," she said at a press conference on Monday. "We want to digitize our rich contents so that it can take different multimedia platforms such as online, broadcasting and radio."

Sim said market forces are driving the group to new media platforms, including online publications. She pointed to the United Kingdom as an example of the market trend, where newspaper online advertising expenditure already exceeds print revenues. However, she said the speed of implementation of the new media platform for the new merged group will depend on the market and how technology progresses.

"You can't take it [new media platforms] on too early, otherwise you will be losing a lot of money," she said, adding that the existence of relevant infrastructure for the new media is also an important consideration.

Sim also said that while the group will focus mainly on Chinese-language media, it will explore ways to translate the group's content into a language that growing non-Chinese audiences interested in happenings in China can comprehend.

On the merger exercise, she said, the necessary approvals from the authorities are expected in September, and the deal will be completed with the listing of Ming Pao on the Bursa Malaysia early next year. Meanwhile, Ming Pao is to take over the listing status of Sin Chew, thus giving it a listing on the Bursa Malaysia and Hong Kong Stock Exchange.

Sim said the name of the merged listed company is expected to change from Ming Pao to another name, which she did not disclose at the press conference. However, she did say the existing brand names of the publications, such as Sin Chew, Ming Pao, Nanyang, Guang Ming, would be maintained.

Under the merger exercise, Nanyang shareholders will be entitled to exchange their shares at RM4.20 each for new Ming Pao shares at an issue price of HK$2.70, which represents an indicative basis of 3.53 new Ming Pao shares for every one existing Nanyang share held.

Sin Chew shareholders will be entitled to exchange their shares at RM4.00 for every Ming Pao share priced at HK$2.70, representing an indicative basis of 3.36 new Ming Pao shares for every one existing Sin Chew share held.

Tiong Hiew King, currently the largest shareholder in the three newspaper groups, is to maintain his controlling stake in the new group through a majority 52% stake. Up to 30% of the shares in Ming Pao after the exercise are to be traded on the Hong Kong Stock Exchange and the rest on the Bursa Malaysia.

One of the regulatory hurdles the merged entity will have to clear is compliance with Malaysia's 30% bumiputera, or ethnic Malay, share-holding requirement for locally held corporate entities. CIMB Investment Bank Bhd's director of investment banking, Christopher Chan, said that because Sin Chew and Nanyang have already complied with the race-based affirmative-action requirements, the calculation can be based on the shares held by the existing shareholders of Ming Pao.

(Asia Pulse)


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