TEMASEK Holdings' unit Belford Investments has proposed a buyout of transport operator SMRT Corp at S$1.68 a share, in a deal that values the firm at S$2.57 billion.
The proposed acquisition for all the shares in SMRT not already owned by Temasek will be effected by way of a scheme of arrangement in accordance with the Singapore Companies Act and The Singapore Code on Take-overs and Mergers, said Temasek and SMRT in a joint statement issued on Wednesday.
Temasek already owns some 54 per cent of SMRT and the takeover would cost Singapore's investment firm nearly S$1.2 billion.
The scheme price represents a 10.8 per cent premium over SMRT's 12-month period volume weighted average price (VWAP) of S$1.516 per share, prior to the last trading day on July 15. The exit offer at S$1.68 per share is a 8.7 per cent premium over SMRT's last traded price of S$1.545.
Once the acquisition is completed, SMRT will become a wholly-owned subsidiary of Temasek and will be delisted from the Singapore Exchange.
"Taking the company private will allow SMRT to better fulfil its role as a public transport operator without the pressure of short-term market expectations," said SMRT chairman Koh Yong Guan.
"We welcome the transition to the New Rail Financing Framework (NRFF), which is an improvement on the current framework.
"However, the company will continue to face significant risks. We do not have any control over fare increases and ridership growth - two key revenue drivers for SMRT Trains," he added.
Further investments would also be necessary to fulfil its role as a public transport operator.
From the shareholders' perspective, it would also allow minority shareholders to monetise their holdings through this scheme and avoid the uncertainties of the transition.
In addition, the exercise will remove all costs and distractions associated with SMRT's listing requirements, including quarterly reporting.
"We will have greater flexibility to work with SMRT as a private entity to seek sustainable long term solutions as part of its transition," said Chia Song Hwee, president of Temasek International.
SMRT directors have appointed Merrill Lynch (Singapore) as the deal's financial adviser. Based on their advice, the directors view the scheme favourably and are supportive of the acquisition, subject to the advice of an independent financial adviser on the terms of the scheme.