HPL, Ong Beng Seng, Temasek units CLA and Mapletree in rival offer for SPH

S$2.10-a-share full cash offer pips Keppel's S$2.099 bid in cash and Reit units

A CONSORTIUM comprising Hotel Properties (HPL), H15 businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree, is proposing to acquire Singapore Press Holdings (SPH) T39 at S$2.10 per share in cash.

In an announcement on Friday (Oct 29) before the market opened, the consortium announced it had on Thursday submitted to the SPH board a proposed acquisition for all the shares of SPH via a scheme of arrangement.

The consortium vehicle, Cuscaden Peak, is 40 per cent held by a HPL unit called Tiga Stars, 30 per cent held by Temasek unit CLA Real Estate Holdings, and 30 per cent held by the Mapletree group. Property group Mapletree is also a Temasek-linked entity.

CLA owns property group CapitaLand, real estate assets in Australia and investments in the life sciences sector. It is the majority owner of CapitaLand Investments.

Tiga Stars is 70 per cent owned by HPL and 30 per cent owned by Como Holdings. The latter is beneficially owned by Ong Beng Seng, who is also the managing director and deemed controlling shareholder of HPL.

The offer price proposed by Cuscaden is slightly higher than what has been offered by Keppel Corp, another Temasek-linked entity.

SPH had in August received a privatisation offer from Keppel BN4 at S$2.099 per share. This offer comprises 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. It is also to take place via a scheme of arrangement.

Based on Thursday's (Oct 28) closing price of S$1.10 and S$0.975 respectively for Keppel Reit K71U and SPH Reit SK6U units, Keppel's privatisation offer would have been worth around S$2.086 per share.

The Keppel deal also includes a break fee of S$34 million payable by SPH if a superior competing offer emerges that the independent directors deem more favourable for shareholders.

Keppel also has the option, in the event a competing offer emerges, to make a voluntary conditional cash offer for SPH in lieu of proceeding with the acquisition by way of the scheme.

SPH said on Friday evening it is considering Cuscaden's proposal with a view of maximising shareholder value. It has notified Keppel of the offer, and Keppel has the opportunity within 10 business days to improve its current proposal.

Keppel said on Friday morning it is reviewing the matter and will make an announcement at the appropriate time.

SPH owns 65.4 per cent of SPH Reit. The consideration of 0.782 SPH Reit unit under Keppel's proposed privatisation offer is part of a distribution-in-specie of 45.4 per cent of SPH's stake in SPH Reit, while Keppel would retain 20 per cent of SPH Reit.

Cuscaden said that subject to the finalisation of the terms of the possible scheme, the completion of its proposed cash acquisition of SPH will result in Cuscaden incurring an obligation to undertake a chain offer for all units in SPH Reit in accordance with the Singapore Code on Take-overs and Mergers.

Cuscaden said its proposed consideration will not be reduced or adjusted for the break fee, nor for SPH's dividend of S$0.03 per share for FY2021 ended Aug 31.

The Cuscaden proposal is also subject to SPH accepting and finalising the terms of the scheme with Cuscaden and entering into definitive agreements to effect the scheme. There is currently no legally binding agreement between SPH and Cuscaden.

Several analysts The Business Times spoke to expressed confusion about the current situation.

CGS-CIMB analyst Lim Siew Khee said the consortium may have decided to bid for SPH on account of its rich portfolio. She added the competing offer also gives SPH shareholders more options to cash out their shares.

Phillip Securities senior research analyst Terence Chua said SPH shareholders could find the consortium's offer a better deal, since it is a cash-only deal compared to Keppel's offer giving shareholders both cash and shares.

He said the consortium could also be drawn to SPH's purpose-built student accommodation (PBSA) portfolio, but added it is unclear what the consortium would do with other assets that do not seem to fit into its members' current businesses. In particular, such assets would include SPH's stake in telco M1 and its Genting Lane data centre assets.

"For Keppel, there is a clear strategic proposition because (the deal) would have consolidated their holdings and made it easier to make decisions as a sole shareholder," Chua said.

Keppel is also a partial owner of M1 and has partnered SPH in the development of the Genting Lane data centre facility. Also, Keppel subsidiary Keppel Telecommunications & Transportation is sponsor of Keppel DC Reit. The latter is a real estate investment trust with a focus on data centre and other new economy assets and has recently announced a deal to invest in some M1 assets.

"Assuming (the consortium is) successful, it... would have to work with Keppel for so much of these overlapping assets. But they probably still see the value and that's why they put up the bid," Chua added.

For now, Chua said Keppel may have to consider making a better offer in place. But the conglomerate would also have to keep an eye out on its net gearing, which was at 0.76 times as at Sep 30, 2021.

Travis Lundy, an analyst at Quiddity Advisors, which publishes on SmartKarma, said in a report the deal bears watching.

"And as every good event person knows, if the stock goes higher on expectation of a higher bid because the bidders have room to bid higher, it is more likely to get a higher bid," he said.

United First Partners' head of Asian research Justin Tang noted that Ong is a notable member of the consortium. The Malaysia-born tycoon played a key role in bringing the Formula One race to Singapore, and had also partnered with Temasek back in 2002 to launch a takeover bid for steelmaker NatSteel.

Shares of SPH closed flat on Thursday at S$1.99 each. They were halted on Friday morning. Units of SPH Reit, also halted on Friday morning, had also closed flat on Thursday, at S$0.975 each.

HPL closed at S$3.45, up S$0.15 or 4.6 per cent, while Keppel shares rose S$0.01 or 0.2 per cent to close at S$5.38 on Friday.

SPH and SPH Reit on Friday evening requested for the trading halt to be lifted.

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