Singapore Airlines (SIA) is not lifting its buyout offer for Tiger Airways despite claims that the offer fails to consider the views of long-term minority shareholders.
SIA said in a statement yesterday that its offer for the budget carrier is "compelling", adding that market analysts have also recommended that shareholders accept it.
The airline said the offer price represents "premiums of between 32 per cent and 42 per cent over the last traded price; and the one-month and three-month volume weighted average prices of Tiger Airways shares preceding the announcement of the offer".
Citing the report from Maybank Kim Eng Securities, which had been appointed as the independent financial adviser for the general offer, SIA said the offer price also represents a premium of 42.6 per cent over the average share price target estimates of research brokers on Nov 5.
It also noted that Tiger Airways' independent directors have recommended that shareholders accept the offer and that "the majority of analysts who cover Tiger Airways have recommended that shareholders accept the offer".
SIA, which already owns 55.8 per cent of Tiger Airways, made a $453 million takeover offer for the rest of the airline on Nov 6. It aims to delist and privatise the carrier and fully integrate it within the SIA group.
It is offering 41 cents per share in cash - 32.3 per cent higher than Tiger Airways' closing price of 31 cents on Nov 5. Under the offer, Tigerair shareholders can opt to subscribe for SIA shares at $11.1043 each.
Last Friday, the Securities Investors Association Singapore (Sias) issued an open letter to SIA, on behalf of Tiger Airways' long-term minority investors, "to put forward their case for a revised offer".
These investors felt SIA could do better on its offer price of 41 cents, given that the airline had paid more for Tigerair shares in the past.
It bought out Temasek Holdings' 7 per cent stake in Tiger Airways in 2013 at $0.678 per share.
Sias also noted that SIA bought perpetual convertible securities that were eventually converted to shares at $0.565 apiece last year.
However, SIA said in its filing to the Singapore Exchange yesterday that the independent financial adviser has noted that the financial terms of the offer "are, on balance, fair and reasonable".
Sias also asked that the deadline for accepting the offer be extended from Dec 28 to Jan 11, in view of the year-end holidays.
This was not directly addressed in SIA's response yesterday.
Sias told The Straits Times yesterday that it has no further comment on the matter.
"It is now up to the shareholders to decide as Sias, as a policy, does not say to shareholders whether they should vote for or against. They must now make an informed decision," Sias added.
