Bumi Armada Shares Jump After Report of Potential Stake Acquisition by MISC

By Ying Xian Wong

Shares of Bumi Armada jumped after local media reported that energy-shipping business MISC could be considering acquiring a substantial stake in the company.

Shares of the Malaysia-based offshore energy facilities and services provider rose as much as 6.9% on Tuesday morning. They were recently 4.3% higher at 0.61 ringgit ($0.13), taking 12-month gains to more than 23% and giving the company a market capitalization at MYR3.44 billion.

The Edge publication on Saturday quoted unnamed sources as saying that MISC may be in talks with Bumi Armada shareholders to buy a significant stake.

MISC shares were last 0.5% lower at MYR8.74.

Neither company immediately responded to requests for comment.

Maybank Investment Bank analyst Jeremie Yap said Tuesday that if the deal materializes, it could boost Bumi Armada's shares and would likely be neutral for MISC stock.

Bumi Armada has struggled to secure new floating production storage and offloading vessel jobs recently, likely due to unproven bankability in the past years, Yap said. If it doesn't win enough contracts, Bumi Armada will enter an earnings growth stagnation phase in 2025, he added.

BIMB Securities said it is unconvinced that MISC will proceed with the deal, which it thinks isn't financially justifiable. There are numerous other investment opportunities available that could yield significant returns for MISC's shareholders, the brokerage said.

Given the funding issues that MISC and industry peers are facing globally, the potential acquisition looks like a waste of financial resources, BIMB analyst Azim Faris Ab Rahim said in a note.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

July 08, 2024 22:26 ET (02:26 GMT)

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