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Takeover contest puts spotlight on Singapore

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Singapore might be reluctant to say it openly, but the city-state sees a huge opportunity to try to seize the crown of leading international financial centre in Asia with rival Hong Kong suffering from political tensions and pandemic restrictions.

Much is going to plan. It has opened its borders to tourists and business travellers from countries including the UK, US, Canada and many European nations. Its regulators have created structures aimed at luring bankers and asset managers from Hong Kong and set rules that could allow the city to become a global cryptocurrency centre.

But a missing piece is for Singapore to show that its own equity market can be a vibrant arena for dealmaking. An opportunity to take the temperature on this has now arrived with a takeover contest that may ultimately be decided by two bids separated in value by 0.001 of a Singapore dollar. That is a matter of concern to some small shareholders.

The interest centres on Singapore Press Holdings, a locally listed media and property conglomerate that controls prized media assets, such as the Straits Times, and trophy real estate assets.

In May, SPH said it would separate its cash-burning media business into a not-for-profit company, but would leave its portfolio of non-media assets intact. That attracted the attention of Keppel, a Singapore conglomerate in which state investment company Temasek holds a 20 per cent stake.

Keppel made an offer to purchase and privatise the non-media business of SPH, including the juicy property holdings. The SPH board, which said that it had considered other offers, recommended Keppel’s cash-and-share offer as the best option. Shareholders approved the plan to separate the media business in September and Keppel’s bid was seen as a done deal. The entire thing, say some shareholders, has a classically Singapore feel to it: an “arranged marriage”, as one put it, organised under the eye of traditional and protective parents.

From the start, though, Keppel’s bid rankled with some minority shareholders, who saw it as undervaluing the assets. The premium offered by Keppel looked stingy, one minority SPH shareholder told the Financial Times. Some shareholders believe that if the media restructuring is taken into account, the offer remains below SPH’s net asset value per share of $2.18 at August 31. The value of its investment portfolio has increased, especially as the Covid-19 situation has improved.

Swirling in the deal’s background is the persistent Singapore question of corporate cosiness — an issue directly raised by a journalist at a briefing held shortly after the board recommended the Keppel bid. The role played by Lee Boon Yang, who is both SPH chair and Keppel’s former non-executive chair until April, was queried. The parties said Lee “did not play any part in the transaction”. 

Despite frustration expressed in private to the FT about the deal, the volume of audible backlash has been small. The corporate players involved, said some shareholders, were simply too core to the Singapore establishment for a big public fuss to be worth making.

Now the situation has produced a twist: an all-cash counter offer that came in 0.001 cents higher than the original cash-plus-share bid from Keppel. The second offer came from Cuscaden Peak, a consortium comprising a unit of billionaire hotelier Ong Beng Seng’s Hotel Properties and two Temasek-linked entities, CLA and Mapletree.

SPH shareholders remain concerned that both offers undervalue the company, the Securities Investors Association (Singapore) said this week.

Other parties are still free to make a better offer if they are interested. But SPH shareholders will hardly benefit from a “battle” that has, so far, been fought with the slenderest of differences in offer terms by two entities with shared links to a large investor.

SPH said it was engaging with both Keppel and Cuscaden “as part of its fiduciary duties to maximise value for all shareholders”. “Should an unsolicited superior proposal arise, the board will evaluate its merits,” it said. Keppel and Cuscaden declined to comment.

The clash may not yet be over — Keppel has until November 15 to respond with an “improved proposal”. But the situation raises an important question. Would shareholders have received a higher offer if it was all taking place in another centre of more active M&A animal spirits?


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