Sias urges Boustead Singapore to raise offer price for Boustead Projects

THE Securities Investors Association (Singapore) (Sias) on Thursday (Feb 16) called on Boustead Singapore : F9D 0% to increase its offer price for Boustead Projects : AVM 0%, its real estate subsidiary. 

In a letter to Boustead Singapore, Sias agreed that the discount to asset value in this case was “simply too large to ignore”, although it recognised that expecting the group to offer the maximum perceived value to acquire and privatise its subsidiary was unrealistic.

“Offerors will always pitch their prices as low as possible, while offerees will always hope for the highest possible price,” said Sias president and chief executive David Gerald. 

The engineering-services provider is looking to take Boustead Projects private at S$0.90 per share, an offer which has been deemed as “unattractive” by analysts, who have also pointed out that the deal favours Boustead Singapore more. 

The current offer price is 7.1 per cent above Boustead Projects’ close on Feb 6 at S$0.84, but is only 71.1 per cent of the company’s last reported net asset value (NAV) of S$1.265 per share as at Sep 30, 2022. 

Given that most of the properties held in the books are valued at historical cost, Boustead Projects’ minority shareholders believe the current offer price “significantly undervalues” their investment.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Echoing the sentiment, Sias said a middle ground should be found. It suggested that an offer price on par with the NAV is “clearly justified”. As the offer is not final, Sias reiterated its call for the offer price to be raised.

Boustead Singapore on Feb 6 announced a voluntary unconditional offer to take Boustead Projects private, in a bid to “simplify the group structure and reduce organisational complexity”. Boustead Singapore owns 54.9 per cent of Boustead Projects.

Shares of Boustead Singapore closed at S$0.865, down 1.1 per cent or S$0.01. Boustead Project ended at S$0.97, up 1.57 per cent or S$0.015 on Thursday.