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GLP accepts S$3.38 per share offer from China consortium, valuing it at S$16b

Offeror Nesta Investment Holdings intends to delist the logistics facility operator

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"GLP is by far the largest player in China and is a proxy to long-term secular growth trends in domestic consumption and organised retail in the country, which continues to drive firm demand for modern logistics facilities. Given the limited conditionality of the scheme of arrangement and the fact that GIC - GLP's single largest shareholder - has provided an irrevocable undertaking to vote in favour, we see a good chance of the privatisation succeeding." - Eli Lee, investment analyst, OCBC Investment Research

Singapore

AFTER much anticipation, Global Logistic Properties (GLP) has accepted a Chinese consortium's offer of S$3.38 per share in cash, valuing the company at about S$16 billion.

This comes after GLP and Nesta Investment Holdings, the offeror, made a joint statement on July 14, with Nesta intending to delist and privatise the company following the finalisation of the deal. If it goes through, the deal will be the largest private equity buyout of an Asian company by enterprise value, surpassing last year's takeover of Chinese Internet security company Qihoo 360 Technology, according to data compiled by Bloomberg.

Nesta is a wholly-owned subsidiary of Nesta Investment Holdings MidCo Limited, which is owned by a group comprising Hopu, Hillhouse Capital, SMG, Bank of China Group Investment and Vanke.

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The offer represents an 81 per cent premium over a 12-month volume weighted average price and "exceeds highest ever closing price since listing", the statement said. The offer price of S$3.38 per share is about 25 per cent above GLP's closing price on July 12 before July 13's trading halt, pending an announcement. GLP closed trading at S$3.29 on Friday.

The joint announcement said that the offer price would not be reduced by GLP's proposed dividend of S$0.06 per share, which was announced on May 19.

Seek Ngee Huat, chairman of GLP's board, chairman of the special committee, and independent director, said: "After an extensive evaluation of all final proposals received, the special committee decided on the proposed scheme, which we believe is compelling and value-enhancing for all shareholders."

Singapore's sovereign wealth fund GIC, which is GLP's single-largest shareholder with a 36.84 per cent stake, has given an undertaking to support the bid, which is to be carried out through a scheme of arrangement.

"As a major shareholder whose interest is aligned with all shareholders of GLP, GIC's expectations have always been that the strategic review process conducted by GLP must be fair, robust and transparent, so as to maximise value for all shareholders," GIC said in a statement on Friday.

GIC added that its undertaking was a soft one, and it is open to accept another "unsolicited, higher competing bid".

Subject to shareholders' approval of the scheme and other scheme conditions, the transaction is expected to be completed on or before April 14, 2018.

GLP will appoint an independent financial adviser to advise the independent directors on the deal. Details of the scheme including the independent directors' final recommendation and the advice by the financial adviser will be included in the scheme document, which is expected to be rolled out to shareholders in due course.

Morrison & Foerster said on Friday that its lawyers are acting as international counsel to GLP in the proposed deal.

Eli Lee, investment analyst, OCBC Investment Research, said: "GLP is by far the largest player in China and is a proxy to long-term secular growth trends in domestic consumption and organised retail in the country, which continues to drive firm demand for modern logistics facilities. Given the limited conditionality of the scheme of arrangement and the fact that GIC - GLP's single largest shareholder - has provided an irrevocable undertaking to vote in favour, we see a good chance of the privatisation succeeding."

Justin Tang, director of global special situations at Religare Capital Markets (Singapore), said that the proposed deal represents a "stellar outcome for shareholders". "The low conditionality of the deal provides certainty for shareholders while the undertaking from GIC to vote in favour minimises vote risk."

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