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Hot stock: SIA dips, Tigerair soars as market digests takeover-bid news

Singapore Airlines' (SIA) share price shed 0.98 per cent or 11 Singapore cents, falling to S$11.04 by 2.57pm on Friday, following news of its voluntary conditional general offer for all the Tiger Airways shares that it does not already own.

TIGER Airways' counter surged 32.3 per cent or 10 Singapore cents to 41 Singapore cents by the end of trading on Friday, following news of Singapore Airlines' (SIA) takeover bid.

SIA's share price dipped 0.09 per cent or one Singapore cent, closing at S$11.14, after the market digested its voluntary conditional general offer for all the Tiger Airways shares that it does not already own.

Both SIA and Tiger Airways had requested a trading halt before the market opened on Friday, with the announcement of the takeover bid coming soon after. While SIA's share price rose as much as five Singapore cents after trading resumed at 1pm, the counter gave back its gains as the day wore on.

SIA is offering Tiger Airways shareholders S$0.41 per Tiger Airways share in cash, as well as an option to subscribe for SIA shares at S$11.1043 apiece.

The offer price represents a premium of 32 per cent, 35 per cent and 42 per cent respectively over the last traded price, the one-month and three-month volume-weighted average prices of Tiger Airways shares, preceding the offer.

SIA, which currently owns 55.8 per cent of Tiger Airways, intends to delist and privatise the budget carrier.

"We believe our offer to Tiger shareholders is compelling and hope that it will be considered favourably. We also believe that Tiger's prospects to grow independently are limited in the highly competitive LCC (low-cost carrier) landscape in Southeast Asia," said SIA CEO Goh Choon Phong in an email to SIA group staff on Friday morning.

"The early benefits to Tiger from being part of the SIA group have already been demonstrated. Feed that Tiger gets from Scoot, and the feed that Tiger provides to Scoot, is important for the long-term success of both carriers, and for the all-important development of the Singapore hub."