BT Explains: Keppel's bid to take SPH private

Vivienne Tay

Published Mon, Aug 2, 2021 · 04:57 AM

KEPPEL Corporation on Monday announced a surprise bid to take media and property group Singapore Press Holdings (SPH) private. The deal values SPH at S$3.4 billion with Keppel's share of the deal totalling S$2.2 billion.

The proposed deal will take place via a scheme of arrangement - to be approved by SPH and Keppel shareholders, as well as other conditions and regulatory approvals.

What the deal means for SPH shareholders

Total consideration of S$2.099 per share

This will comprise cash of S$0.668 per share, 0.596 Keppel Reit unit (valued at S$0.715) and 0.782 SPH Reit unit (valued at S$0.716) per share.

SPH said the offer price represents a 39.9 per cent premium to the last traded price of S$1.50 per share before the strategic review was announced on March 30. The offer price also matches SPH's net asset value excluding the media business.

Contingent on media restructuring

The proposed deal casts more light on what will become of SPH if shareholders approve the restructuring of the company's media business.

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SPH, which publishes The Business Times, had announced a strategic review in March to transfer its media business into a company limited by guarantee (CLG). A CLG is an entity that does not have share capital or shareholders. Instead, members act as guarantors and agree to pay a fixed sum in the event that the company winds up.

Scheme meeting required

Shareholders representing 75 per cent of SPH's share capital will need to approve the scheme and the distribution in specie of the SPH Reit units. The scheme will also require a sanction by the Singapore court.

What about Keppel shareholders?

Consolidation of ownership in existing SPH partnerships

Keppel will be able to consolidate ownership in its existing partnerships with SPH in M1 and a proposed Genting Lane data centre, allowing Keppel to maximise synergies in these strategic assets.

Addition of new assets

Keppel's stake in Keppel Reit would fall, but Keppel would end up with indirect ownership of 20 per cent of SPH Reit. SPH Reit's portfolio comprised five commercial properties in Singapore and Australia as at Aug 31, 2020.

The three properties in Singapore - Paragon, Clementi Mall and The Rail Mall - had an aggregate value of S$3.3 billion.

In Australia, SPH Reit holds an 85 per cent stake in Figtree Grove Shopping Centre and a 50 per cent stake in Westfield Marion Shopping Centre. The two properties in Australia had an aggregate value of A$836.5 million (S$831.2 million).

SPH also owns and operates The Seletar Mall, and holds a 50 per cent stake in two joint venture companies developing an integrated development comprising The Woodleigh Residences and The Woodleigh Mall.

Under the purpose-built student accommodation segment, SPH operates two brands - Student Castle and Capitol Students - with a presence in both the UK and Germany.

SPH also has assets in the aged care sector in Singapore and Japan. It owns Orange Valley, one of Singapore's largest private nursing homes.

Outside of property, SPH's interests are varied. For instance, it has a 40 per cent stake in a MICE business. It also has an indirect stake in South Korean e-commerce company Coupang, and stakes in online trading platform iFast Corporation and car marketplace sgCarMart.

Potential synergies

Keppel has said the SPH Reit stake will provide the conglomerate with a "natural platform" to recycle its retail assets (including I12 Katong) and also tap the recovery and growth of the Singapore retail market.

Keppel's operations include property management and asset management, through subsidiaries such as Keppel Land, Keppel Telecommunications & Transportation (Keppel T&T) and Keppel Capital.

Keppel Land is the sponsor of Keppel Reit, while Keppel T&T is the sponsor of Keppel DC Reit. Keppel Capital, its asset management arm, owns half of Keppel DC Reit's manager, with Keppel T&T owning the other half.

READ MORE:

BT Explains Keppel SPH M&A

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