What You Should Know About Keppel Corporation's (SGX: BN4) Privatisation Bid for SPH's (SGX: T39) Non-Media Business

Update on 15 Nov: Cuscaden Increases Its Bid for SPH

It’s turning out to be a bidding war for Singapore Press Holdings Limited‘s (SGX: T39) non-media assets (SPH). 

Shortly after Keppel Corporation (SGX: BN4) increased its bid for SPH last week, Cuscaden Peak has upped its offer to at least S$2.36 per SPH share. 

Previously on 29 October, Cuscaden offered an all-cash proposal of S$2.10 per share to acquire SPH. 

Cuscaden is a consortium comprising Tiga Stars (a subsidiary of Hotel Properties Limited SGX: H15)), Adenium (a wholly-owned subsidiary of CLA Real Estate Holdings), and Mapletree Fortress (an indirect, wholly-owned subsidiary of Mapletree Investments). 

The latest offer from Cuscaden is also higher than Keppel’s revised bid of S$2.351 per SPH share as announced last week.

Under the revised Cuscaden offer announced this morning, SPH shareholders have two options.

They can choose to receive either:

• an all-cash offer of S$2.36 per share; or
• S$2.40 per share, comprising S$1.602 of cash per share and 0.782 SPH REIT (SGX: SK6U) units valued at S$0.798.

Here’s an illustration showing the various offers on the table:

In an announcement, Cuscaden said that SPH acknowledges that its offer is superior to the offer made by Keppel.

Unlike the Keppel offer, no additional approvals are required from the shareholders and consortium members of Cuscaden. 

Cuscaden also added that it is working with SPH for the transaction to be completed by February 2022.

[Editor’s note: The article below was originally published on 2 August 2021.]

This morning, Keppel Corporation (SGX: BN4) announced that it’s bidding for Singapore Press Holdings Limited‘s (SGX: T39) (SPH) non-media assets.

Here’s what you should know about the big announcement in just 60 seconds!

Keppel Corp’s Acquisition of SPH’s Ex-Media Business

Keppel is looking to acquire SPH for S$2.24 billion through a scheme of arrangement. The deal will exclude SPH’s media arm and a part of SPH REIT (SGX: SK6U).

Keppel’s ultimate aim is to delist and privatise SPH, provided the proposed restructuring of SPH’s media assets goes through.

Under the proposed deal, here’s what shareholders will get:

• Each SPH shareholder will be entitled to S$0.668 in cash and 0.596 Keppel REIT (SGX: K71U) unit (valued at S$0.715 each) for every SPH share held.
• SPH will concurrently distribute in specie around 45% of its stake in SPH REIT to SPH shareholders while retaining a 20% stake in the REIT. Each SPH shareholder will therefore receive 0.782 SPH REIT unit (valued at S$0.716 each) for every SPH share.

The total sum of the above comes up to around S$2.099 per SPH share, which is an 11.6% premium over SPH’s closing share price of S$1.88 on 30 July 2021.

Rationale for the Transaction

Keppel said that the acquisition will accelerate its Vision 2030 plans to become an integrated business providing solutions for sustainable urbanisation, with an asset management arm to fund its growth and provide a platform for capital recycling.

More specifically, Keppel sees the following benefits:

• Expand into the secular growth sectors of purpose-built student accommodation (PBSA) and senior living
• Benefit from the recovery in retail
• Consolidate its ownership of M1 and Genting Lane data centre asset
• Improve its earnings quality in line with its asset-light business model

As for SPH, it said that the proposed deal is an outcome of the second stage of SPH’s strategic review, after the media business restructuring as announced on 6 May.

Timeline of the Transaction

The proposed transaction is subject to approvals by Keppel’s and SPH’s shareholders at their respective extraordinary general meetings by the end of October/November 2021, among other things. 

The transaction is expected to be completed by the end of this year.

If the deal is approved, SPH will be delisted and will become a wholly-owned subsidiary of Keppel.

This is how Keppel will look like post-acquisition (it will exclude Keppel’s offshore and marine business, which is to be merged with Sembcorp Marine (SGX: S51), and Keppel Logistics):

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer doesn’t own shares in any companies mentioned.