Shares of Singapore Press Holdings (SPH) rose yesterday, and those of Keppel Corp also rose initially, after the two companies resumed trading on the Singapore Exchange (SGX).
At noon, SPH traded at $1.92, up four cents, or 2.13 per cent, but Keppel had by then fallen to $5.44, down five cents, or 0.91 per cent.
SPH eventually closed at $1.92, and Keppel lost 0.73 per cent to end at $5.45.
The pair halted trading on Monday to announce an offer by Keppel to privatise SPH after its media business is hived off.
The offer, which values SPH at $3.4 billion, will see SPH delisted and becoming a wholly owned subsidiary of Keppel, whose share of the deal stands at $2.2 billion. It will also see Keppel holding a remaining 20 per cent stake each in SPH Reit (real estate investment trust) and Keppel Reit.
Under the offer, SPH shareholders will receive 66.8 cents in cash per share, as well as 0.596 Keppel Reit unit and 0.782 SPH Reit unit per share. That is a total consideration of $2.099 per share, representing an 11.6 per cent premium to SPH's last traded price of $1.88 per share last Friday.
The offer price is also equivalent to the net asset value per share of SPH, excluding the media business.
The proposal is contingent on the completion of SPH's plans to restructure the media business, announced on May 6. This would see the transfer of the media assets to a company limited by guarantee.
SPH publishes newspapers in Singapore's four official languages. Its titles include The Straits Times.
The transfer of the media assets is subject to SPH shareholders' approval at an extraordinary general meeting, which is expected to be convened this month or next.
If approved, the restructuring of the media business is expected to be completed by the end of this year. SPH's privatisation by Keppel is likely to be concluded soon after.
SPH chief executive Ng Yat Chung said Keppel's privatisation offer is the result of a strategic review process announced on March 30. He noted that the first step under that process was to restructure the media business to ensure it had a 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," Mr Ng said in a statement.
He added that Keppel's offer was superior to those of some 20 potential bidders that took part in the review process.
Keppel chief executive Loh Chin Hua said the offer will allow Keppel to tap SPH's purpose-built student accommodation business in Britain and Germany, as well as its aged-care facilities in Singapore and Japan.
SPH Reit owns retail assets such as Paragon shopping mall in Orchard Road and The Clementi Mall, as well as Figtree Grove Shopping Centre in the Australian city of Wollongong, while Keppel Reit holds prime Singapore office properties such as Marina Bay Financial Centre and One Raffles Quay.
The offer comes after Keppel said in its results briefing last week that it was offloading $2.3 billion worth of assets as part of a programme announced last September.
Keppel declared an interim cash dividend of 12 cents a share for the first half compared with three cents in the first half of last year. This came after it reported a net profit of $300 million for the six months to June 30, reversing from a loss of $537 million in the same period last year.
CGS-CIMB analyst Lim Siew Khee is expecting Keppel to offload $1.1 billion worth of SPH's non-core assets. All this is likely to boost Keppel's dividend payout over the next two years, she said.
Ms Lim has a 12-month target price of $6.90 on Keppel, representing upside of more than 27 per cent from current levels.
