Terms for CMA delisting offer 'fair'

Singapore

THE terms in CapitaLand's delisting offer for CapitaMalls Asia (CMA) "are fair and reasonable from a financial point of view in the context of a non-change of control transaction", said the independent financial adviser for CMA.

Having considered factors for and against the offer in such context, Deutsche Bank said that factors in favour "outweigh in number".

In a circular sent out to shareholders yesterday, independent directors (IDs) of CMA advise shareholders who wish to realise their investments now and who believe that the share price may fall and no better offer may be tabled to either accept the offer or sell a portion or all of their shares in the open market.

Shareholders who think otherwise may consider retaining a portion or all of their shares, the IDs said, but added that they may risk holding on to unquoted shares if the delisting goes through.

Since its offer for CMA, CapitaLand has shored up its stake in CMA from 65.3 per cent to 70.4 per cent through open market purchases.

The offer price of $2.22 per share has, however, stirred a debate among market watchers, which was carried in the press, over what is a fair price for CMA.

The shopping mall operator was listed at an initial public offering (IPO) price of $2.12 in November 2009, and its net asset value (NAV) per share has grown 38 per cent since the IPO.

Given that CMA shareholders approved a final dividend of 1.75 cents per share for fiscal 2013, CapitaLand has pared its offer price accordingly to $2.2025 per CMA share.

In citing factors against the offer, the IFA said that the net offer price represents a discount of 17.3 per cent to the mean analyst revised net asset value (RNAV) of $2.66, and a 3.6 per cent discount to the mean broker price target of $2.28.

Yet, in a longer list of factors in favour of the offer, IFA said that the offer price's valuation ratios are higher than the mean and median of 27 comparable companies in Singapore and Hong Kong.

Its valuation ratios are also higher than the mean and median of preceding transactions by Singapore property peers.

The net offer price represents a premium of 17.8 per cent over CMA's unaudited NAV per share as at March 31.

CapitaLand has proposed - subject to conditions - to offer CMA employees who are holders of the CMA share awards the right to be awarded ordinary shares in CapitaLand to align the interest of these holders with CapitaLand group. It is also proposing a retention scheme for certain key executives at CMA of up to $1.7 million in shares, which will be vested before being released to the key executives in March 2017.