SINGAPORE – Analysts say the revised buyout offer from Keppel Corp for Singapore Press Holdings (SPH) is significantly better than the rival all-cash deal from Cuscaden Peak, a consortium backed by Hotel Properties businessman Ong Beng Seng and two Temasek-linked entities.
But Keppel’s final offer of $2.351 a share, which includes additional cash of 20 cents a share, is not the full-cash deal the market appears to be hoping for, they noted.
Keppel’s buyout proposal included the option for the company to make a cash offer if a competing offer emerged.
Mr Justin Tang, United First Partners’ head of Asian research, said: “Keppel’s revised offer is definitely a better deal but because it is not an all-cash offer, the value of the scrip components (i.e. SPH Reit and Keppel Reit units) will be subject to market fluctuations.
“But from a price-to-book perspective, no one can say it’s not a fair deal. Many retail SPH shareholders got in at much higher share price levels and are hoping to be made whole, but they cannot expect someone to make good their losses.
“The million-dollar question now is: Will Mr Ong Beng Seng come back with a counter-offer?”
If Cuscaden Peak’s cash offer prevails, the firm would have to undertake a chain offer for all SPH Reit units as well. It clarified on Nov 1 that the minimum chain offer price it would have to offer for each SPH Reit unit is 96.4 cents in cash.
Assuming Cuscaden Peak counters the revised Keppel offer and wins enough support from SPH shareholders, it will need to pay more than just the minimum for SPH Reit units, Mr Tang noted.
“It may have to offer close to $1.05 a unit because they are making a general offer for the units, which means they will need to acquire 90 per cent of the minority Reit holders’ stake in the SPH Reit in order to wholly own the Reit,” he said.
Corporate governance advocate Mak Yuen Teen of the National University of Singapore noted that Keppel’s revised offer tops the Cuscaden one.
“The expected speed of completion and deal certainty, with all the regulatory approvals obtained and the waiver of the `material adverse effect’ clause, is a plus, which puts this ahead of the Cuscaden offer.”
This means the Keppel offer will proceed even if there is a material decline in SPH’s consolidated net asset value, he added.
“So unless Cuscaden or another offeror comes back with something better soon, I believe SPH shareholders will accept.”
Professor Mak added: “It is surprising that Cuscaden didn’t make a better offer to start with. Perhaps it could come back with a better offer. But then, Temasek is the controlling shareholder of Keppel, and of CLA Real Estate and Mapletree Investments, for Cuscaden.
“It may not be in Temasek’s interest if the bidding intensified, although the decision should be for the respective companies’ boards to make.”
Retail shareholder Mano Sabnani, who owns both Keppel and SPH shares, said that if Cuscaden Peak makes an offer of $2.36 a share in cash, it will likely win.
“The SPH board will have to accept the rival offer as it tops Keppel’s bid and offers certainty in cash payment rather than a mixture of cash and Reit units,” he said.