Privatisation bid for GL 'not fair but reasonable': IFA

GUOCO Group's offer to take GL private at S$0.70 has been deemed "not fair but reasonable" by GL's appointed independent financial adviser, W Capital Markets.

In a circular released on Thursday, GL's independent directors recommended - based on W Capital's advice - that its shareholders accept the offer.

They added that shareholders can choose to sell their shares in the open market if they can obtain a price higher than the offer price, after taking into account the brokerage and related costs in connection with open market transactions.

Compared to the closing price of S$0.71 at the last practicable date, the offer price represents a 1.4 per cent discount, and a 0.5 per cent discount against the volume-weighted average price of S$0.704 per share for the period between the offer announcement date and the latest practicable date.

This led W Capital to believe the offer is "not fair".

However, it noted that the group had posted a net loss of US$19.8 million for the six months ended Dec 31 last year, a reversal from its US$26.9 million profit in the year-ago period.

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GL also said that they expect strong headwinds in the UK hotels to continue in 2021 due to renewed lockdown with tiered restrictions being imposed by the UK government as a result of a record number of COVID-19 cases.

W Capital further noted that the offer price to net asset value (P/NAV) per share was 0.73 times, which is above the mean and median weighted average of P/NAV of comparable companies of 0.7 times and 0.63 times respectively.

Given that GuocoLeisure Assets Limited, which owns 73.67 per cent of the shares, has irrevocably undertaken to accept the offer, it is unlikely that there will be a competing offer from any third party, said the financial adviser.

Shareholders who wish to accept the offer must do so by 5.30pm on March 4, though the offerer has a choice to extend the closing date.

Shares of GL were trading 0.7 per cent, or 0.5 Singapore cent lower at 71 cents as at 4.22pm.