EXCL - FREN merger – XL Axiata becomes the merged entity

EXCL - FREN merger – XL Axiata becomes the merged entity In today’s newspaper publication, a summary of the merger plan between XL Axiata (EXCL), Smartfren Telecom (FREN), and Smart Telecom was mentioned. The merger between XL, Smartfren, and ST is a combination of three limited liability companies to form the Merged Company, which will result in operational efficiencies, economic efficiencies, and cost reductions. The merger will also strengthen the overall business strategy and enhance the capital structure. XL will be the Merged Company, and Smartfren and ST will be dissolved under the law after the completion of the merger. Details regarding the financial figures of the MergeCo will await announcements from the respective issuers. (Source : Investor daily) Comment : We appreciate the completion of this deal. A source familiar with the matter indicates a merger value of approximately USD3.45 bn. Our five-year DCF analysis suggests that the MergeCo could achieve an enterprise value of IDR114.5 tn, with an equity value of IDR52.4 tn (~USD3.4 bn). This valuation closely aligns with the market's estimated merger value and represents a 20.2% premium over the combined standalone values of EXCL and FREN. We believe the merger will unlock significant synergies and substantially enhance MergeCo's value. The financial details of the MergeCo will be disclosed following announcements from the respective issuers.