After media business vote, focus turns to Keppel offer for SPH

That Singapore Press Holdings (SPH) shareholders voted in favour for the demerger of the media business was not a big surprise, but the upcoming vote for Keppel Corp's $2.2 billion takeover-cum-privatisation offer may not be as straightforward, some market observers say.

SPH shareholders have voted in favour of the media restructuring plan, which will involve hiving off its entire media-related business to a company limited by guarantee (CLG) - a not-for-profit entity that will initially receive $125.8 million in financial help from SPH. This includes $80 million in cash and $30 million in SPH shares and SPH Reit units.

The Keppel deal, which values SPH at $3.4 billion, will take place through a scheme of arrangement. It was subject to SPH shareholders first approving its media restructuring plan, which they did yesterday.

"The vote shows that almost everyone agrees that this is the most optimal situation for SPH," KGI Securities investment analyst Joel Ng said. "But the vote on Keppel's privatisation offer may not be so straightforward. That's because some investors seem to want a better offer from Keppel," he added.

Retail shareholder Mano Sabnani, who owns both Keppel and SPH shares, said he is in favour of the media demerger, but added: "Since Keppel has said that it is a rare opportunity to buy a stable asset like SPH, and that it fits in with their business, why doesn't it offer to pay a bit more?"

The number of shareholders voting in favour of the scheme must exceed 50 per cent, and shareholders representing 75 per cent of SPH's share capital will need to approve the scheme and the distribution in specie of the SPH Reit units.

Mr Ng added that post-demerger, SPH will have more flexibility to explore other options including monetising its assets.

Mr Terence Wong, chief executive of fund management firm Azure Capital, believes Keppel's offer is fair. "If Keppel had not made its offer, SPH's share price would not have reached anywhere near the current level," he said.

"Away from the scrutiny that listcos are subject to, the CLG board will have a longer runway to beef up the financials and quality of the media business," he added.

Corporate governance advocate Mak Yuen Teen, professor of accounting at the NUS Business School and an SPH shareholder, said he has not decided if he will vote for the Keppel deal. "What were the other offers? Give us some idea at least," he said.

Prof Mak also pointed out that many SPH shareholders did not vote at yesterday's meeting.

"Only about 370 million shares were voted versus 1.6 billion of total outstanding shares. So only 23 per cent of shares were voted. The virtual EGM format probably didn't help. Before the pandemic, about 58 per cent of shares were voted at shareholder meetings on average," he added.