SINGAPORE - Keppel Corp is proposing to acquire Singapore Press Holdings (SPH) through a privatisation offer after the hiving off of SPH's media business.
The offer, which values SPH at $3.4 billion, will see SPH delisted and become a wholly owned subsidiary of Keppel, the companies jointly announced on Monday (Aug 2). Keppel’s share of the deal is about $2.2 billion.
Under the offer, SPH shareholders will receive 66.8 cents in cash per share, as well as 0.596 Keppel Reit units and 0.782 SPH Reit units per share.
SPH, Keppel Corp and their subsidiaries SPH Reit and Keppel Reit called for trading halts before the stock market opened on Monday.
The scheme is subject to approval by SPH and Keppel shareholders and is also subject to other conditions, including regulatory approvals.
The privatisation offer through Keppel's wholly owned subsidiary Keppel Pegasus will also see Keppel holding a remaining 20 per cent stake each in SPH Reit and Keppel Reit.
The offer is contingent on the successful completion of the media restructuring announced on May 6, which would see the transfer of SPH’s media assets to a company limited by guarantee, a not-for-profit entity.
The transfer of the media assets is subject to SPH shareholders’ approval at an extraordinary general meeting (EGM) expected to be convened this month or next.
If approved at the EGM, the restructuring of the media business is expected to be completed by the end of the year. SPH’s privatisation by Keppel is likely to be concluded soon after this.
In a statement on Monday, SPH said that its board carried out a comprehensive review of the group’s various strategic options, including maintaining the status quo, monetisation of certain assets, a partial sale or privatisation of SPH post-media restructuring.
With an objective to maximise value and minimise disruption to shareholders, the board concluded that the privatisation of the entire company would be the preferred solution, it said.
“It derives a better valuation outcome for all shareholders where a control premium is paid for the entire company. Also, it avoids a situation where prime SPH assets are cherry-picked, leaving SPH with its existing debt and the risk of being unable to monetise its remaining assets,” SPH said.
SPH said that the final closed bids for the company were evaluated based on price, terms and conditions, financing certainty, regulatory approvals, transaction structure and execution risks.
The final proposal from Keppel to privatise SPH was selected based on the various criteria, it added.
SPH produces news publications in Singapore's four official languages, including The Straits Times and Lianhe Zaobao.
SPH Reit's portfolio includes shopping centres in Singapore such as Paragon and The Clementi Mall.
In a separate statement, Keppel said that the acquisition of SPH will accelerate its plans to be an integrated business providing solutions for sustainable urbanisation.
It noted that SPH possesses a quality portfolio of businesses and assets which is strongly aligned with Keppel’s business and will complement and strengthen three of Keppel’s four focus areas - urban development, connectivity and asset management.
This portfolio includes purpose-built student accommodation, senior living facilities as well as stakes in SPH Reit and Reit management.
“The proposed acquisition of SPH would also allow Keppel to consolidate its existing ownership of M1 and the Genting Lane data centre asset, which are currently jointly owned,” Keppel said.
Under the terms of the scheme, Keppel will offer about $1.08 billion in cash and about $1.156 billion of Keppel Reit shares. SPH will concurrently distribute in specie SPH Reit shares valued at $1.157 billion, while retaining a 20 per cent stake in SPH Reit.
SPH chief executive Ng Yat Chung noted that the privatisation offer from Keppel is the result of the strategic review process, the first step of which was the media business restructuring to ensure its sustainable future while removing its losses from SPH.
"With the privatisation offer from Keppel, shareholders now have an opportunity to realise the value of their SPH shares at a premium of 39.9 per cent to the last traded price before the strategic review was announced," he said in a statement.
The mooted consideration of $2.099 per share also represents an 11.6 per cent premium to SPH's last traded price of $1.88 per share on July 30.
Said Keppel CEO Loh Chin Hua: “The proposed acquisition is accretive to Keppel’s earnings on a pro forma basis and would boost our AUM (assets under management) as well as recurring income.”
He noted that following the SPH transaction as it continues its asset monetisation programme, Keppel will have sufficient headroom to continue exploring opportunities in other growth areas, such as renewables and decarbonisation solutions, in line with its longer-term goals.
“If the acquisition is successfully completed, we will also tap Keppel’s strong record in capital management to explore how we can create value from SPH’s assets, including possible new Reit listings or monetising certain liquid investments when the timing is right.”
Credit Suisse (Singapore) and Allen & Gledhill are acting as the exclusive financial adviser and legal adviser to SPH for the strategic review and proposed transaction.
JP Morgan (SEA) is the sole financial adviser and WongPartnership is the legal adviser to Keppel in this transaction and scheme of arrangement.