Temasek will not proceed with partial offer for Keppel

TEMASEK will not proceed with its pre-conditional S$4 billion partial offer for Keppel Corp, which breached a key term of the deal after posting a S$697.6 million net loss for the second quarter ended June.

In a bourse filing on Monday, it was disclosed that Temasek will invoke the Material Adverse Change (MAC) pre-condition in its decision to pull out of the deal. The Securities Industry Council of Singapore has confirmed that it has no objection to Temasek invoking the clause.

The MAC clause mandates that Keppel's profit after tax must not fall by more than 20 per cent, or below S$557 million, over the cumulative four quarters from the third quarter ended September 2019.

However, the clause was breached with Keppel's latest results. The firm's cumulative loss after tax for the year up to and including end-June stood at S$165 million, on the back of massive impairments of S$919 million in its Q2 results.

Excluding the impairments, Keppel posted a net profit of S$222 million for the quarter - up 45 per cent from S$153 million a year ago. Revenue came in 26 per cent lower at S$1.33 billion owing to lower contributions across its divisions as a result of "significantly lower level of activities" due to Covid-19 and the measures to combat the outbreak.

In October last year, Temasek, which then already owned about one-fifth of Keppel, had offered to buy an additional 30.6 per cent stake at $7.35 per share. But following Keppel's results announcement on July 30, it was announced that Temasek will decide on whether to proceed with the offer by Aug 31.

Shares of Keppel last traded at S$5.40 on Friday.