Lessons from the KepLand takeover

THE Keppel Corp takeover of Keppel Land was a fascinating and instructive study for minority shareholders, the offerors and perhaps even institutions. Now that the deal has been completed, it might be useful to revisit the salient points.

First, the two-tier offer, with one price appreciably higher than the other. This structure is not common but experts say the higher price is one way of encouraging acceptances to attain the compulsory acquisition threshold.

In the early stage of the Keppel Corp offer, there was confusion over what exactly was needed to activate the second price. Most observers assumed it was 90 per cent of KepLand, which is the widely-known compulsory delisting threshold.

However, triggering of the second price was actually dependent on Keppel getting 90 per cent of the shares it did not already own when the offer was launched. Since it owned 55 per cent when the takeover was announced, this meant it needed an additional 40.5 per cent (90 per cent of the 45 per cent it did not own) or a total of 95.5 per cent of KepLand. This was an important distincti…