POS ... Oct10

Sources say the planned divestment of Khazanah Nasional Bhd’s 32% stake in Pos Malaysia Bhd is taking longer than expected due to negotiations surrounding the Government’s “golden share” in the company.

The governments are grappling with how to deal with watering down the golden share, which is what potential bidders want.

Golden shares are typically held by the government, giving it veto power in major decisions of the company. In their simplest form, government golden shares do not interfere with the day-to-day operations of companies but rather with major decisions like amend certain provisions in the articles of association or allowing foreign interests to acquire more than a certain percentage of the shares in the company or to prevent hostile takeovers which a government judges is against the public interest.

In the case of postal services, governments’ golden shares usually seek to ensure that basic postal services reach rural areas, without being subordinated to purely profit motives.

However, it is understood that in Malaysia, golden shares have had a wider ambit, covering areas such as appointment of top management personnel and of capital expenditure, which is likely to be the case with Pos Malaysia.

Interestingly, in 2006, the European Court of Justice (ECJ) had ruled against The Netherlands holding a “golden share” in postal services provider TNT. The ECJ decided that the practice of holding a share, which gives the state a veto over mergers, was incompatible with the free movement of capital in the internal market.

The Dutch government had argued then that holding this special share was necessary to guarantee a universal mail service. But the court decided that “the special share goes beyond what is necessary to safeguard the solvency and continuity of the provider of the universal postal service.”

It is reported that 11 parties have expressed interest in picking up Khazanah’s 32% stake in Pos. These include two global express and courier players, DHL Express and TNT NV. Local players said to be eyeing the stake include National Express Courier Services, Konsortium Logistik, the Employees Provident Fund (EPF), DRB-HICOM and Tune Group.

The EPF, which holds a 5.76% stake, is also interested in raising its shareholding in Pos Malaysia, possibly driven by an intention to hold a bigger stake in this dividend-yielding asset.

It is also understood that Khazanah had opened the initial stages of the bidding in May 2010. Other substantial shareholders in Pos Malaysia include Permodalan Nasional Bhd, with 8.45%, and Aberdeen Asset Management with 7.09%.

Khazanah managing director Tan Sri Azman Mokhtar has stressed that there will be a transparent bidding process to select the buyer for the 32% stake.