Hot stocks: SPH up 1.7% on new Cuscaden offer, SPH Reit down 1%

SHARES of Singapore Press Holdings (SPH) T39 jumped as much as 2.1 per cent on Tuesday (Nov 16), after offeror Cuscaden Peak raised its bid and Keppel Corporation BN4 maintained that its offer is final.

Keppel Corp and Keppel Reit K71U : K71U 0%also saw some lift in their prices following the latest developments, but SPH Reit declined as much as 1 per cent.

SPH, which publishes The Business Times, jumped as much as 2.1 per cent or S$0.05 to S$2.38 as at 9.48 am. The counter later closed 1.7 per cent or S$0.04 higher at S$2.37 on Tuesday, with 22 million shares changing hands. 

SPH Reit SK6U : SK6U 0%reached a high of S$1.03 shortly after the market opened on Tuesday, up 1 per cent or S$0.01. It later lost some ground to reach a low of S$1.01 by the midday trading break. It later lost some ground to reach a low of S$1.01 by the midday trading break, before closing flat  at S$1.02 on the day. 

SPH, along with SPH Reit, resumed trading on Tuesday after calling for a trading halt on Monday.

Keppel Corp hit a high of S$5.34 as at 9.56 am, gaining 0.6 per cent or S$0.03, before closing flat at S$5.31 on Tuesday. 

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Meanwhile, Keppel Reit rose 0.9 per cent or S$0.01 to S$1.17 as at 9.01 am, before climbing further to close 1.7 per cent or S$0.02 higher at S$1.18.

Keppel Corp on Tuesday reiterated that its offer for SPH is "firm and irrevocable" and provides the shortest time in payout by mid-January 2022 for SPH shareholders.

Its statement comes a day after the consortium comprising Hotel Properties H15 : H15 0%, businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree, raised its offer for SPH. Just days before, Keppel Corp raised its bid after Cuscaden made its surprise offer for SPH's non-media business.

Cuscaden Peak is now offering each SPH shareholder the option of an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.

The Cuscaden scheme is expected to be completed by February 2022, but its scheme meeting can only proceed if SPH shareholders vote against Keppel's offer at Keppel's scheme meeting to be held by Dec 8.

In a report dated Nov 15, CGS-CIMB said SPH shareholders will likely go for Cuscaden’s revised scheme. Its research team believes Keppel is unlikely to counter with a higher offer and may instead look for other assets. 

“With this deal likely to be off for Keppel, the group may have to look harder to find similar assets that yield recurring income,” CGS-CIMB said. 

It noted that Cuscaden’s deal is positive for Keppel Reit as it will remove the price overhang on the real estate investment trust (Reit). In contrast, the deal is negative for SPH Reit as the price would be capped at the mandatory offer price of S$0.964 by Cuscaden in the near term.

“However, the potential higher free-float and merger between SPH Reit and any of the Reits (MCT/CICT) under Cuscaden would serve as a re-rating catalyst for SPH Reit,” CGS-CIMB’s research team said. 

UOB Kay Hian (UOBKH) said Cuscaden’s offer is superior to Keppel’s revised cash-plus-stock offer of S$2.351 per share. Both options presented by Cuscaden also give SPH shareholders higher total/cash consideration and price stability.

Echoing the sentiment, CGS-CIMB said Cuscaden’s offer also gives shareholders the chance to participate in the potential future growth of SPH Reit. 

The new revised offer by Cuscaden values SPH at 1.1 times its book value and 21.5 times or 21.8 times UOBKH’s earnings estimate. 

READ MORE:

• Keppel says offer for SPH firm and irrevocable, provides shortest time to pay-out
• BT Explains: Why SPH shareholders who want Cuscaden's offer need to vote at both scheme meetings
• Cuscaden raises SPH bid to S$2.36 all cash, or S$2.40 in cash and SPH Reit units
• BT Explains: Keppel's counter offer for SPH
• Keppel raises SPH bid to S$2.351 a share, cash component up by 20 cents; says price is final
• BT Explains: Why is Ong Beng Seng interested in SPH?