Broker's take: OCBC advises CWT shareholders to accept HNA's offer

SHAREHOLDERS of CWT should accept the takeover offer by Hong Kong-listed HNA Holding, OCBC Investment Research said on Monday.

"In our view, with the offer price representing a 19.5 per cent premium to our fair value of S$1.95, we deem the offer by HNA, subject to pre-conditions, attractive, and recommend shareholders to accept the offer, once made,'' analyst Eugene Chua wrote in the brokerage's 'Market Pulse' report.

Mr Chua added that HNA intends to delist CWT once public float falls below 10 per cent.

On Sunday, HNA announced that, subject to the fulfilment or waiver of pre-conditions, it would make a voluntary general offer to buy CWT at S$2.33 a share in cash, valuing CWT at about S$1.4 billion. The offer price represents a 12.6 per cent premium to close of S$2.07 a share on Friday.

Mr Chua noted that CWT shareholders who accept the offer, if and when it is made, will be entitled to retain the FY16 proposed final dividend of S$0.03 a share payable on May 17, 2017.

For the offer to be made, all pre-conditions must be fulfilled or waived by HNA by September 9, 2017. These include HNA's shareholders approval at a general meeting to be held as well as anti-trust approvals from various countries like China, European Union and Japan.

Mr Chua said CWT shareholders should also note that if any dividend, right or other distribution or return of capital, other than the FY16 proposed final dividend is made after Sunday's announcement, HNA reserves the right to reduce the offer price of S$2.33 a share by an amount equivalent to such action.

To-date, CWT shareholders holding a combined 65.1 per cent stake in CWT, have given their irrevocable written undertakings to tender their shares when HNA makes the offer.