SIA makes takeover offer for Tigerair, to delist and take budget carrier private

A Tigerair and SIA plane at Changi Airport in 2013.
A Tigerair and SIA plane at Changi Airport in 2013. PHOTO: ST FILE

SINGAPORE - Singapore Airlines (SIA) has made a S$453 million takeover offer for budget carrier Tiger Airways, of which it now owns 55.8 per cent.

The announcement on Friday morning (Nov 6) was made shortly after both carriers requested for a trading halt.

SIA is offering S$0.41 in cash per share, 32.3 per cent higher than Tigerair's closing price of 31 cents on Thursday.

Tigerair shareholders also have an option to subscribe for SIA shares at S$11.1043 each, a 0.4 per cent discount to their closing price of S$11.15 on Thursday.

 

The intention is to delist and privatise the budget carrier, SIA said.

A full integration of Tigerair into the SIA group will enable enhanced commercial and operational synergies through a full integration of Tiger Airways into the SIA Group, the premium carrier said.

SIA's chief executive Goh Choon Phong said: "Tigerair's success is closely linked to it being part of the SIA group through our portfolio strategy, in which we have investments in both the full-service and low-cost aspects of the business."

While the budget carrier has done well in its restructuring to improve its financial position, "we believe that Tigerair's development potential is limited without deeper integration with the SIA group to build a strong foundation for growth over the long term."

The announcement comes a day after SIA announced a 135 per cent surge in second quarter profit to S$213.6 million.

This was mainly on the back of lower fuel prices, higher dividends from investments and Tigerair becoming a subsidiary.

SIA said its offer for Tigerair, which values it at approximately S$1.02 billion, will be funded through internal cash resources.

The offer also represents a premium of 32 per cent, 35 per cent, and 42 per cent respectively over the last traded price, the one-month and 3-month volume weighted average prices of Tigerair shares. It is also higher than all analysts' price targets as published on Bloomberg between October 23 and Thursday, said SIA.

The option to subscribe for SIA shares is exerciseable at any time during a 15 market day period, which will commence on a date to be announced by SIA.

The offer is conditional upon SIA and parties acting in concert with it owning more than 90 per cent of Tigerair by the close of the offer and the approval in-principle for the dealing in, listing of and quotation of the new SIA shares.