SATS, 81 per cent-held by Singapore Airlines , will look at possible investments in both the airport services and food businesses, CEO Clement Woon said at a media briefing on Tuesday.

Both SFI and Singapore Air are majority owned by Temasek Holdings .

'It looks like an arranged marriage where everybody is happy,' said Ms Annie Koh, associate dean at Singapore Management University's business school, noting synergy benefits for SATS and SFI, while Temasek would gain funds for opportunistic investments.

'Temasek had SFI in its portfolio for some time and even a long-term strategic investor has to know how to take profits,' Ms Koh said.

Temasek had a portfolio worth S$185 billion at end-March, though its value is probably less given the rout in global markets and the fund's large holding of financial stocks.

'Singapore Food's operations will enable SATS to have a wider food product offering and expand in the UK market,' SATS' Woon said, adding SFI would provide steadier earnings and reduce SATS' dependence on the volatile aviation industry.

SATS provides ground and inflight services to airlines calling at Singapore's Changi Airport, while SFI businesses range from selling prepacked food in Britain to managing abattoirs and providing food to Singapore's military.

SATS said it will buy Temasek's 70 percent stake in SFI for S$334.5 million in cash, or S$0.93 a share, and will offer to buy the rest at the same price - a 4.5 per cent premium over SFI's Monday close.

The maximum SATS may have to pay takes into consideration outstanding share awards and options that may be exercised and converted into SFI shares.

Temasek said the SATS offer was the most attractive among several it had received for its SFI stake.

Merrill Lynch advised SATS on the deal, while Credit Suisse represented SFI. -- REUTERS