What happened
In an intriguing move late last night, Keppel Corporation Limited (SGX: BN4) raised its bid to acquire Singapore Press Holdings Limited (SGX: T39), or SPH.
The blue-chip offshore and marine conglomerate has increased its offer price by 12% from the previous S$2.099 per share to S$2.351 per share.
Back in early August, Keppel had made an offer of S$0.668 in cash for each SPH share and also included 0.596 units of Keppel REIT (SGX: K71U) and 0.782 shares of SPH REIT (SGX: SK6U).
Keppel has now raised the cash component of the offer by S$0.20 while keeping the REIT component constant.
But because the prices of both REITs have fluctuated since the initial offer, the final consideration is now S$0.252 higher, exceeding the additional S$0.20 in cash being tabled.
So what
The revised offer from Keppel is 12% higher than a competing cash offer of S$2.10 per SPH share made by a consortium comprising Hotel Properties Limited (SGX: H15), or HPL, businessman Ong Beng Seng, and Temasek-linked entities CLA Real Estate and Mapletree Fortress.
Not only is this higher offer more financially attractive, but it also has the highest certainty of success as regulatory approvals have been obtained from the Monetary Authority of Singapore (MAS) and the Foreign Investment Review Board of Australia.
SPH shareholders can also expect to receive the payment cum shares by mid-January 2022, or just two months from today, assuming both Keppel and SPH’s shareholders approve the deal in an extraordinary general meeting to be held on 8 December.
Now what
Keppel has the financial means to raise its offer price for SPH as global economic conditions have continued to strengthen, lifting the performance of SPH’s underlying portfolio.
The higher offer will raise Keppel’s net gearing by just 0.03 times and its asset monetisation programme is projected to continue raising cash for the group to pursue its Vision 2030 objectives.
As it stands, SPH shareholders should favour Keppel’s new offer as it is not just 12% higher than the competing offer of S$2.10, but also allows them to partake in the growth of two REITs.
Of course, now that Keppel has fired the first salvo, the ball is now in the HPL consortium’s court.
Should the consortium decide to offer an even higher price than what Keppel has proposed, there could be a potential bidding war.
And if such an event does occur, SPH shareholders will be the ones benefiting from an ever-increasing offer price.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
