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Independent financial adviser KPMG Corporate Finance has found the offer by Keppel Corp to take its real estate subsidiary, Keppel Land, private to be not fair but reasonable.
KPMG noted that based on its sum-of-the-parts (SOTP) valuation, the base price and higher offer price are at a "significant discount to the sum-of-the-parts estimated valuation range of between $6.58 and $6.79 per share".
However, the independent financial adviser qualified that the revaluation of properties, which forms a large part of the SOTP surplus value, has been done on an 'as is' basis which assumes that the properties will be disposed of at the assessed values and, accordingly, has not considered any potential development profits should the properties be developed and completed.
On the other hand, the offer can be deemed reasonable for a number of reasons including the fact that the base offer price and higher offer price represent significant premiums to the median share price; that Keppel Corp already owns and controls more than 50 per cent of the total issued share meaning that it is unlikely that there will be another bidder offering better terms in the near term; and that the key valuation metrics compare favourably to the listed median of Keppel Land's listed peers and to the median of precedent transactions involving Singapore property developers.
Keppel Corp on Jan 23 launched an offer to take its real estate subsidiary, Keppel Land, private at a base offer price of S$4.38 per share. This will be raised to S$4.60 per share if acceptance levels exceed the 90 per cent threshold that turns the offer into a compulsory acquisition.