CapitaLand sweetens delisting offer for CMA with higher price of $2.35 per share

Singapore

CAPITALAND has sweetened its delisting offer for CapitaMalls Asia (CMA) with a higher offer price of $2.35 per share, after shareholders voiced their unhappiness over the initial offer price of $2.22.

The final offer price is ex-FY2013 final dividend, which means that CMA shareholders who received the final dividend of 1.75 cents per share for fiscal 2013 will still get $2.35 apiece for their acceptance shares.

CapitaLand said that this final offer price will not be further revised. The offer was also declared unconditional and its closing date extended from May 26 to June 9.

Earlier on, CapitaLand's offer to delist CMA at $2.22 per share was a point of contention among market watchers and CMA shareholders, given its narrow premium to CMA's initial public offer (IPO) price of $2.12 in November 2009.

CMA shareholders conveyed their dissatisfaction to CapitaLand's key management officers last week at a closed-door dialogue session organised by the Securities Investors Association (Singapore) (SIAS).

The initial offer price of $2.22 was "too low" for loyal shareholders who have been holding CMA shares since the IPO, said Phillip Lam, a CMA shareholder who attended the dialogue session. Given that CMA's malls have been reporting positive rental reversals, shareholders should reap higher returns for their CMA shares, he said.

Some shareholders had suggested, however, at the dialogue session that an offer price of $2.45-$2.55 would have been appropriate for CMA. Regina Lim, head of Singapore equity research and ASEAN at Standard Chartered, said that with the higher offer price, more shareholders are likely to accept the offer. But there is a "small risk that CapitaLand may not get the 90 per cent acceptances that it needs to get CMA delisted within the offer period".

Shares of CMA closed 4.9 per cent higher yesterday at $2.35 but had hit $2.36 several times yesterday after the trading halt was lifted, suggesting that some shareholders could still be hoping for a higher offer price.

As at Thursday, CapitaLand received valid acceptances amounting to 100.59 million shares or 2.6 per cent of the issued share capital of CMA.

SIAS president David Gerald said that the association is encouraged that CapitaLand has "taken into consideration not just the IFA (independent financial advisor) report but also strong feedback from CMA shareholders".

The IFA report by Deutsche Bank last week noted that the terms in CapitaLand's delisting offer for CMA "are fair and reasonable from a financial point of view in the context of a non-change of control transaction".

A CapitaLand spokeswoman said yesterday that this price revision has addressed several considerations in the IFA's report and "increases the certainty of success".

The revised offer price of $2.35 now exceeds the mean broker price target of $2.28 and has eliminated the discount to CMA's adjusted net asset value. It now represents a 31.5 per cent premium to the last traded price on April 11 before the offer announcement, instead of a 23 per cent premium.

CapitaLand has obtained a waiver from the Securities Industry Council (SIC) on the offer condition, which means that shareholders who accept the offer will still have their shares accepted by CapitaLand even in the event that the delisting does not succeed.

"Going unconditional provides certainty of acceptances to CMA shareholders who accept the offer," the CapitaLand spokeswoman said.

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. Credit Suisse and Morgan Stanley are joint financial advisers to CapitaLand on the CMA offer.