Voluntary conditional cash offer for Delong closes with 98.75% acceptances

THE voluntary conditional S$7 per share cash offer for Delong Holdings closed on Tuesday, with a total of 108.8 million shares owned by the offeror and its concert parties, representing 98.75 per cent of the total number of shares.

The offeror will be exercising its right of compulsory acquisition to acquire the offer shares of dissenting shareholders.

With acceptances exceeding 90 per cent of issued shares, the Singapore Exchange will suspend trading of the shares at the close of the offer.

In late July, Delong chief executive officer Ding Liguo relaunched his voluntary cash offer to take the company private at S$7 per share via his vehicle Best Grace Holdings, after an aborted privatisation attempt at the same price that breached Singapore's takeover code last September.

However, its appointed independent financial adviser (IFA) PricewaterhouseCoopers Corporate Finance (PwCCF ) found this to be "not fair but reasonable".

PwCCF said in August that the financial terms of the revived buyout bid were not fair, partly because the offer price is at a 40.1 per cent discount to the net asset value (NAV) per share as at June 30, and Delong's valuation measures are also below the mean and median of those of comparable companies.

Furthermore, the offer price is "unfavourable" as it is below what Best Decade, a concert party of Best Grace, paid for a 15.04 per cent stake in Delong in June 2018, the adviser said. Best Decade paid the US dollar equivalent of S$7.42 per share.

Nonetheless, PwCCF found the financial terms of the offer reasonable.

This is because the offer price is at a premium of 1.9 per cent to the closing price of S$6.87 as at the last unaffected trading day on Sept 26, 2018, and at premiums of 8 per cent, 17.9 per cent, 37.2 per cent and 76.9 per cent above the volume weighted average price for the respective one-month, three-month, six-month and 12-month periods before Sept 26, 2018.

The new delisting rules by the Singapore Exchange (SGX) will not apply, as the offeror will end up holding 100 per cent of the company's issued shares after the compulsory acquisition.

SGX changed its rules in July, requiring voluntary delisting offers (including scheme of arrangements and general offers) to be both "fair" and "reasonable" in the IFA's opinion.