OCBC’s offer for Great Eastern is about responding to minority dissent, doubling down on its strategy

THIS column said last week that OCBC had three options to address the undervaluation of Great Eastern’s shares: it could organise a sale of the insurer, distribute a major portion of its stake to its own shareholders, or try once more to buy out all the insurer’s minority shareholders.

On Friday (May 10), OCBC unveiled a voluntary unconditional cash offer for all the shares it does not already own in Great Eastern, at S$25.60 per share.

This option hews closely to the bank’s longstanding narrative about Great Eastern being a strategic pillar of the group. In the short term, however, it may accentuate the fundamental misalignment of interest between OCBC and Great Eastern’s minority shareholders.