What happened
A consortium comprising Hotel Properties Limited (SGX: H15), or HPL, businessman Ong Beng Seng (the managing director of HPL), and Temasek-linked entities CLA Real Estate and Mapletree Fortress has made an offer to acquire Singapore Press Holdings Limited (SGX: T39), or SPH.
A HPL unit, Tiga Stars, holds 40% of the consortium vehicle, Cuscaden Peak, while CLA Real Estate Holdings and Mapletree Group both have 30% each.
The surprise cash offer, at S$2.10 per share via a scheme of arrangement, came out of the blue.
The offer is conditional on the completion of SPH’s demerger of its media business, which was approved by shareholders during an extraordinary general meeting last month.
So what
This offer is surprising because the entity behind Mapletree and CLA is investment firm Temasek.
Recall that Keppel Corporation Limited (SGX: BN4) had made an offer to acquire SPH back in August this year in a S$2.2 billion transaction to advance its Vision 2030 goals.
Back then, the tabled offer consisted of three components — S$0.668 per SPH share acquired, as well as 0.596 units of Keppel REIT (SGX: K71U) and 0.782 units of SPH REIT (SGX: SK6U).
The total implied consideration for Keppel’s offer amounts to S$2.099 per share.
Now what
When reviewing both deals, two questions immediately popped up.
The first, and most obvious one, was the price offered.
At S$2.10 per share for the HPL consortium versus the S$2.099 offered by Keppel, shareholders of SPH are no better off financially from either deal.
The main difference here is whether they choose to accept the offer and receive partial cash and partial shares in two REITs, or whether they prefer an all-out cash deal.
An argument could be made for more potential upside from receiving units in both REITs as they could still grow their distributions in future, thus garnering higher unit prices.
The second, and probably bigger question, is whether Temasek is involved in both transactions, if at all.
Keppel’s largest shareholder is Temasek, which owns a 20% stake in the offshore and marine conglomerate, while the HPL consortium also has two Temasek-linked entities within it.
Whether SPH is eventually acquired by either Keppel or the HPL consortium, it feels a bit like the same difference to me.
Shareholders of SPH will need to decide on the financial merits and make their decision accordingly.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
