With the proposed merger between media giants Utusan Melayu and News Straits Times Press (NSTP) hitting an unexpected snag, the shares of the companies took a beating today as trading resumed.

When the market closed at 5pm, both companies saw their share prices dropping by around 14 percent.

Shares of NSTP closed at RM2.53, a drop of 13.6 percent - or 40 sen - from the Friday price of RM2.94 when the shares were suspended pending the expected merger.

Meanwhile, Utusan shares was hit a little harder - closing at RM1.56, a drop of 14.75 percent - or 27 sen - from the last traded price of RM1.83.

According to Bursa Malaysia, NSTP was the top loser in today's trading while Utusan was the fourth worst performing stock.

The situation was much worse earlier today when Bursa Malaysia kicked off trading at 9am with NSTP shares shedding a whooping 20.75 percent in the opening minutes.

Utusan, the publishers of Utusan Malaysia and Kosmo , too opened on a negative note - at RM1.75 it was 4.47 percent lower than its closing price on Friday.

In early trading, NSTP shares fell as low as RM2.28, or 22.5%, while Utusan shares dropped to RM1.45, or 20.8%.

By 12.30pm, both companies recovered slightly with NSTP down by 15.3 percent and Utusan down by 16.4 percent.

Shares of both the companies were voluntarily suspended from trading on Friday pending an expected announcement on the merger between the two media giants.

Umno worried?

However, yesterday both the companies said that they could not reach a "definitive agreement in relation to the terms of such merger".

Nevertheless, they added that they would continue to explore and discuss the matter further and will make an immediate announcement to Bursa Malaysia as soon as a deal is inked.

In the meantime, the companied agreed to resume trading of the shares in Bursa Malaysia this morning.

The last-minute cancellation of any announcements yesterday raised questions of possible hiccups in the merger which would create a strong media powerhouse in the country.

The potential merger will see ruling party Umno holding a vast control over Utusan and NSTP's stable of publications and television stations, especially a complete monopoly over the Malay-language newspapers.

It is widely speculated that the merger was in danger of derailment following concerns raised by several Umno supreme council members who were worried for the future of Utusan under the merger.

They feared that the merger would affect the identity of the Malay daily and backfire on the party, despite Umno continuing to control it.

Financial consideration

Yesterday, Prime Minister and Umno President Abdullah Ahmad Badawi once again reiterated that both the papers would continue to retain their respective identities if the merger goes ahead.

He also said that the merger was being discussed solely for financial reasons.

"As far as editorial content is concerned, they will remain the same. This (merger) is for financial reasons. If they pool their resources, they will save money," he was quoted as saying in New Straits Times today.

"What we want to do is build (the two groups) by combining their strengths and resources. As for the way the merger will take place, it is up to those involved."

At present, Umno controls about 50 percent equity interest in Utusan Melayu, which the party took over after an acrimonious battle with the then newspaper's editors and journalists in 1961.

However, the party's control over NSTP has always been through nominee business groups such as Media Prima, which has a 43 percent stake in NSTP.

NSTP publishes the English dailies New Straits Times and Malay Mail as well as Malay newspapers Berita Harian and Harian Metro .

The merger could also pave the way for the ruling party to directly control all the private free-to-air TV stations - TV3, ntv7, 8TV and Channel 9 - which are currently under Media Prima.