Tigerair shares jump after SIA raises buyout offer

Tigerair and Singapore Airlines planes at Changi Airport.
Tigerair and Singapore Airlines planes at Changi Airport.ST PHOTO: JOYCE FANG

SINGAPORE (BLOOMBERG) - Shares of Tiger Airways Holdings jumped 9.8 per cent on Tuesday (Jan 5) after its biggest shareholder Singapore Airlines raised a buyout offer for stakeholders following a call by a lobby group for South-east Asia's largest carrier to sweeten its bid.

Tiger Air rose 9.8 per cent to S$0.45, matching the revised offer price, as of 9am in Singapore trading. SIA was unchanged at S$10.99.

SIA is offering Tigerair stockholders 45 Singapore cents, rising from its initial proposal of 41 cents, the company said in a statement to the stock exchange on Monday. The offer, which SIA said it doesn't intend to revise further, has been extended to Jan 22 from Jan 8.

SIA is seeking to delist Tiger Air after it made losses because of over-expansion in a competitive market that has caused other airlines to be privatised or collapse. The Securities Investors Association Singapore, which campaigns on behalf of minority shareholders, last year asked Singapore Air's board to consider improving the Tiger Air offer, noting that the parent paid 56.5 cents a share to raise its stake in 2014.

"It is an encouraging move by SIA and this, together with the deadline extension, would prompt minority shareholders to reconsider their positions," Mr David Gerald, president of the Securities Investors Association Singapore, said by phone.

"SIA likely raised the price because they haven't reached the 90 per cent threshold to delist Tiger and they're hoping to shore up more support," he said.

SIA owns 77.5 per cent of Tiger Air, based on a company statement. The airline said in November that it will also offer shareholders of the budget carrier an option to buy SIA shares at S$11.1043 each.

SIA injected funds into Tiger Air in 2014 by increasing its stake to include the carrier as a subsidiary. While Tiger Air has reduced capacity, cut routes and ended partnerships in Australia, Indonesia and the Philippines to curb losses, it still reported a loss in the three months ended September.