Contest for SPH good for minorities

I HAVE been saying Singapore Press Holdings (SPH) deserves a better offer than the S$2.099 cash-and-shares offer by Keppel Corp. Many small shareholders of SPH feel the same way.

Some are unhappy about having to take SPH Reit and Keppel Reit units in exchange for their SPH shares.

The new all-cash offer of S$2.10 from a consortium comprising billionaire Ong Beng Seng (OBS) and Temasek-linked entities is welcome as it takes away the uncertainty of fluctuating Reit prices. But it is still underpriced, considering the quality of SPH assets covering shopping malls, student accommodation and eldercare centres.

Keppel will enjoy a break fee of S$34 million if the SPH board now decides to go for the new all-cash S$2.10 offer.

But I think Keppel is unlikely to back off as the SPH assets are a good fit for the ambitious group.

So the broad spread of SPH shareholders can look to a better offer from Keppel. At the least, Keppel will offer a cash alternative of S$2.10. I think it is likely to go slightly higher.

The OBS-Temasek consortium may then also revise its bid. Will we see a bidding war? That's unlikely as Temasek sits on both sides of the bidding activity. It will be a tussle among friendly parties.

In the final analysis, Keppel is likely to walk away with SPH under its wing, having paid somewhat more than S$2.10 per SPH share. Perhaps S$2.20. That would still be a sweet deal for Keppel.

Mano Sabnani