SIA's Tigerair buyout offer is fair

Tuesday's report ("SIA: Tigerair buyout offer 'compelling', won't be lifted") can be said to effectively scotch any hopes some optimistic shareholders may have had of better terms for their holdings.

Viewed dispassionately, Singapore Airlines' buyout offer of 41 cents a share, "representing premiums of between 32 per cent and 42 per cent over the last traded price", seems generous enough, considering prevailing moribund market conditions.

Given that stock prices are constantly in a state of flux, is there really any merit in some investors "jobbing backwards" (as the market phrase goes) to argue that SIA could do better, given that the airline paid $0.678 in 2013 and converted bonds to shares at $0.565 apiece last year?

Here, it may be appropriate to quote Singapore Press Holdings' response in September 1998 to a similarly dissenting shareholder when it embarked on a capital reduction exercise to buy out 10 per cent of each shareholder's stock at $12.20: "It is impossible to accommodate the different share prices paid by every shareholder at different points in time."

Tigerair shareholders who feel they are being short-changed should not overlook the alternative available to them of opting for SIA shares and, thus, participating in the benefits they think they are missing out on.

Narayana Narayana

A version of this article appeared in the print edition of The Straits Times on December 24, 2015, with the headline 'SIA's Tigerair buyout offer is fair'. Print Edition | Subscribe