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Parent's offer for Wheelock is 'fair, reasonable, but not compelling': IFA

PRIMEPARTNERS Corporate Finance, the independent financial adviser (IFA) to the recommending directors of Wheelock Properties (Singapore), on Friday said that the financial terms of the offer are "fair and reasonable, but not compelling, and are not prejudicial to the interests of minority shareholders".

It reached this conclusion after considering that the developer's revenue has decreased significantly across the period under review as majority of the completed development properties have been sold, and the company has not added any new property development projects during this time.

Notwithstanding that the offer price of S$2.10 per share is at a 19.2 per cent discount to the company's net asset value (NAV), the IFA said that the discount is lesser than the range of discounts at which the shares had consistently traded at over the one-year period.

In fact, the shares have not traded above the offer price since July 14, 2017, up until the offer announcement date. Over the past one year, the shares have also traded thinly at an average daily trading volume of about 634,000 shares, representing about 0.22 per cent of the company’s free float.

"While there appears to be a ready market for the shares as indicated by the regular frequency of transactions, the absolute trading volume of the shares is nevertheless very thin which renders the shares illiquid for investors who wish to undertake transactions in larger amounts of shares," it said.

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In comparison with the precedent privatisations, the premium of 22.7 per cent implied by the offer price over the three-month volume-weighted average price (VWAP) of the shares is also "within the range but below the respective mean and the median premia of 34.1 per cent and 27.5 per cent, respectively, as implied by the respective offer price over the three-month VWAP of the shares of the comparable precedent transactions," the IFA said.

The IFA has accordingly advised the directors to recommend that shareholders accept the offer, unless shareholders are able to obtain a higher price on the open market.

Shares of the counter closed flat at S$2.22 on Friday - about 5.7 per cent higher than the offer price of S$2.10 per share.

The recommending directors have concurred with the advice of the IFA over the offer and accordingly recommended that shareholders accept the offer.

So far, the offeror and the parties acting in concert with it collectively hold about 76.2 per cent of the shares, and the company has confirmed that there is no alternative or competing offer available to the shareholders.

"As the offeror and parties acting in concert with it have majority control of the company and the offer is unconditionalin all respects, the likelihood of a competing offer is remote," the IFA said.

The offer will close at 5.30 pm on Sept 7, 2018 or such later date as may be announced by the offeror.

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