Cuscaden raises SPH bid to S$2.36 all cash, or S$2.40 in cash and SPH Reit units
THE CONSORTIUM comprising Hotel Properties (HPL), businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree, has raised its offer for Singapore Press Holdings (SPH), days after rival offeror Keppel raised its bid too.
Cuscaden Peak is now offering each SPH shareholder the option of an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.
Cuscaden had initially offered S$2.10 per share in cash, to rival Keppel's initial bid of S$2.099 in cash and units of both Keppel Reit and SPH Reit. On Nov 9, Keppel beefed up the cash component of its initial offer by S$0.20 per share. This took its offer up to S$2.351 per share, consisting of S$0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit. A counter to Cuscaden's revised bid is not expected as Keppel had said its Nov 9 offer price was final. Cuscaden's latest offer implies a total equity value for SPH of S$3.9 billion.
Independent directors of SPH, which publishes The Business Times (BT), have preliminarily recommended that shareholders vote against the Keppel scheme and vote in favour of the Cuscaden scheme, subject to the independent financial adviser's opinion and the absence of a superior competing offer.
SPH chief executive Ng Yat Chung said Cuscaden's new offer represents a substantial premium of 60 per cent over SPH's undisturbed price as at Mar 30 before the announcement of the strategic review.
The offer also represents a premium of 10.1 per cent over SPH's FY2021 pro forma net asset value per share of S$2.18.
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SPH said it will proceed to hold the Keppel scheme meeting by Dec 8. The Cuscaden scheme meeting can only proceed if SPH shareholders vote against Keppel's offer at the Keppel scheme meeting.
David Gerald, chief executive of the Securities Investors Association (Singapore) (Sias) told BT that Cuscaden has called for a meeting with Sias. The meeting will be held on Tuesday (Nov 16).
Said Gerald: "The Cuscaden revised offer, as it stands, is certainly superior to Keppel's revised offer. It looks like the end to the bidding game, unless another unsolicited offer appears on the scene, which is unlikely."
Other market watchers opined that shareholders are likely to go for Cuscaden's latest offer.
UOB Kay Hian analyst Llelleythan Tan said: "Given Cuscaden's offer has a higher cash consideration, better price stability, they should be inclined to accept it."
He added that the all-cash option is likely to have a higher take-up from investors. However, he also noted that there is still a risk that a majority of SPH's shareholders may approve the Keppel scheme on Dec 8.
Phillip Securities analyst Terence Chua also termed Cuscaden's revised offer "more superior" than Keppel's "final and irrevocable" offer, meaning shareholders are more likely to go for the former.
Justin Tang, United First Partners' head of Asian research, said Cuscaden's latest offer will "suit the individual needs of shareholders". However, he warned that Keppel's offer would trump Cascaden's cash and scrip offer if Keppel Reit and SPH Reit "rally in a huge way".
"If the status quo remains, economically rational shareholders will vote down the Keppel offer and approve the SPH offer," he added.
Terence Wong, chief executive of fund management company Azure Capital, acknowledged that Keppel's offer presents a "quicker completion timeline" of 8 weeks, while Cuscaden's offer could potentially take longer.
"But shareholders who are waiting to get out shouldn't be too concerned about the timeline. They can sell anytime with this beefed up offer," said Wong.
CGS-CIMB analyst Eing Kar Mei noted that Keppel had said their previous offer was final.
"Although they can launch a general offer on SPH, we think they are unlikely to pursue," she said. "If Keppel's scheme arrangement offer does not go through, the price overhang on Keppel Reit's shares will be removed."
As part of the Cuscaden scheme, SPH will undertake a distribution-in-specie of the SPH Reit units it currently holds. This will be up to 45.2 per cent of the total SPH Reit units outstanding.
Depending on which option SPH shareholders select, the Cuscaden scheme may result in a chain offer for all remaining SPH Reit units. If this happens, the minimum chain offer price the consortium has to offer will be S$0.964 per SPH Reit unit, fully in cash.
Cuscaden said in a separate statement on Monday (Nov 15) that it recognises that each SPH shareholder has different investment objectives.
"It has tailored its offer to provide maximum flexibility and value certainty to suit SPH shareholders' individual investment needs," the consortium said in a bourse filing posted by HPL.
The consortium said both options it has offered are of "superior value" to Keppel's final offer. The all-cash option, in particular, has no price volatility, monetisation risk and will also not attract brokerage fees.
"Since the initial announcement of the Keppel scheme on Aug 2, the implied market value of the Keppel scheme consideration fell to as low as S$2.201 per share on Sep 20," the consortium noted.
It is "working expeditiously" with SPH for the transaction to be completed by February 2022. Unlike the Keppel scheme, the Cuscaden scheme does not depend on the approval of the offeror's shareholders, it added.
SPH's Ng said at a briefing on Monday that the board would also consider any other unsolicited competing offer that may arise ahead of the Cuscaden scheme meeting and make recommendations to shareholders accordingly.
The lifting of restrictions under the Newspaper and Printing Presses Act - which currently imposes certain shareholding restrictions on SPH - would happen on or around Dec 1, he noted.
When asked if there were risks of parties taking a significant stake in SPH who could block deals, Ng said it was not for him to speculate on.
"In any scheme proposal, whether somebody can come up and buy a stake to block it, is a possibility that affects every other counter," he said. "Some even may believe that that's a factor, which is why the earlier we can convene the Cuscaden scheme meeting, the better."
Travis Lundy of Quiddity Advisors, who publishes on Smartkarma, said that it is possible someone new could come in, but noted that Keppel would not be able to do so, and two other Temasek-related entities are already part of the Cuscaden consortium.
"I am not sure who else would come in," he said. "I expect any competitor could wait until after the Keppel deal has failed, and wait until things settle down. A new bidder can wait to see if Singapore opening leads to better near-term economic growth."
United First's Tang noted that as of now, the likelihood of new offerors emerging is slim. "Given the string of events and the passage of time since Keppel's offer, any potential counterbidders would likely have surfaced by now," he said.
SPH and SPH Reit separately called for trading halts on Monday. SPH shares closed 0.9 per cent or S$0.02 higher at S$2.33 on Friday, while SPH Reit closed 1 per cent or S$0.01 higher at S$1.02.
READ MORE:
- BT Explains: Keppel's counter offer for SPH
- Keppel raises SPH bid to S$2.351 a share, cash component up by 20 cents; says price is final
- Cuscaden will have to offer minimum chain offer price of S$0.964 per SPH Reit unit
- HPL, Ong Beng Seng, Temasek units CLA and Mapletree in rival offer for SPH
- Keppel makes surprise S$2.2b bid to privatise SPH
- BT Explains: Keppel's bid to take SPH private
- BT Explains: Why is Ong Beng Seng interested in SPH?
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