The Singapore Airlines (SIA) offer for its listed subsidiary Tiger Airways is "fair and reasonable", according to the independent financial adviser appointed by the budget airline's independent directors.
Maybank Kim Eng advised shareholders yesterday to accept the 41 cents-a-share offer unless they can get a better price on the open market. SIA, which has a 55.8 per cent stake in Tigerair, lodged the takeover offer on Nov 6 with the aim of delisting Tigerair and taking it private.
The offer price of 41 cents a share - while 32.3 per cent higher than Tigerair's closing price of 31 cents on Nov 5 - is around 70 per cent below the initial public offering price of $1.50 in 2010. This had prompted the Securities Investors Association Singapore (Sias) to urge Tigerair's board to review the offer to ensure that minority shareholders get a fair return.
Sias president and chief executive David Gerald said in a statement last month: "(SIA's) offer, the minority feels, is not reasonable."
Mr Gerald told The Straits Times yesterday that Sias' role is to represent the interest of the minority shareholders, especially when they are "not correctly treated by the board or the senior management of the companies" they have invested in.
"We are a voice for the shareholders, but we're not the shareholders. We're here to facilitate and mediate if the shareholders want to have a dialogue with Tigerair's board," he added, noting that the association does not play the role of analyst and is not in a position to comment on offer prices.
Mr Gerald cited a case last year where Sias had brokered talks between minority shareholders and CapitaLand's key management officers in a closed-door dialogue session.
Shareholders were unhappy over CapitaLand's initial delisting offer price for CapitaMalls Asia.
After the meeting, CapitaLand made a slight upward revision of the offer price. The initial offer price had also been deemed fair and reasonable by the independent financial adviser appointed by CapitaMalls Asia's independent directors at the time.
Mr Gerald said that he has not received any requests from Tigerair's shareholders to set up a meeting as the independent financial adviser's report has just been released and investors may need a few days to react to the recommendation. "If the reaction is favourable, they may accept the offer. If they're unhappy, we could arrange for a dialogue session, just like what we've done in several cases before," said Mr Gerald.