The Malaysian government will not acquire Datasonic Technologies Sdn Bhd (DTSB), the primary provider of national identity documentation services, as confirmed by the National Security Council (NSC). This decision follows media reports about a potential $1.9 billion acquisition of DTSB from its parent company, NexG Bhd. The NSC stated that while Malaysian citizen identity data is a strategic national asset requiring security and national sovereignty, the Madani government has decided not to proceed with the acquisition.
NexG Bhd's shares fell sharply after the government's announcement. Previously, NexG had valued DTSB at approximately RM7.5 billion ($1.9 billion) through an internal assessment using the discounted cash flow method. This valuation was significantly higher than NexG's market capitalization of around RM1.2 billion ($255 million). The Finance Ministry had reportedly asked DTSB to provide an indicative price for a possible acquisition, along with other scenarios like compensation for contract termination or acquisition of a controlling stake in NexG.
DTSB is a crucial asset for NexG, being the main contributor to its revenue and earnings. It holds substantial government contracts, including a RM1.73 billion ($367 million) contract to supply passport booklets and polycarbonate biodata pages to the Immigration Department until 2032, and a RM732.72 million ($156 million) contract for raw cards and consumables for the National Registration Department for the same period. Any disposal of DTSB would have a material impact on NexG's operations and financial performance, potentially affecting its listing status on Bursa Malaysia.
The government emphasized its commitment to explore proactive strategies to ensure the security and sovereignty of Malaysians' identities while also providing the best value for every ringgit spent. Despite the government's decision not to acquire DTSB, it intends to ensure all parties involved continue to improve services to the people for safety and reliability. The significant gap between DTSB's internal valuation and NexG's market value had previously led to investor uncertainty regarding the likelihood and pricing of any potential deal.
