Temasek makes $1.18 billion offer for SMRT, at $1.68 per share

If Temasek's bid is successful, this means SMRT will be delisted from the Singapore bourse. PHOTO: ST FILE

SINGAPORE - Singapore investment firm Temasek Holdings has made an offer to buy over and take SMRT private at $1.68 per share.

If successful, this means the rail and bus operator will be delisted from the Singapore bourse.

The offer price is a premium over the company's last share price of $1.545 and will see Temasek forking out about $1.18 billion for the rest of the company that it does not own.

Temasek owns 54 per cent of SMRT, which is valued at close to $2.4 billion, based on last Friday's price.

The news comes after the government announced last Friday that it will take over all operating assets of the North-South, East-West and Circle lines, as well as the Bukit Panjang LRT Line, from SMRT for $1.06 billion. This is the net book value - or current value - of the assets, plus GST.

In a statement, Temasek and SMRT said they accept the New Rail Financing Framework (NRFF), as part of a regulatory transition.

However, "there remain significant business risks and challenges, which are beyond the control of SMRT".

SMRT is expected to face challenges - even under the new framework - with costs and uncertainties associated with an ageing and expanded network, the statement noted.

SMRT will also need to focus on delivering on existing and new multi-year programmes to support an ageing and expanded network, including the need to deliver a higher order of rail reliability and service in line with the heightened Maintenance Performance Standards to be determined by the LTA.

"Privatisation will provide SMRT greater flexibility to focus on its primary role of delivering safe and high quality rail service, without short term pressures of being a listed company, in the midst of its transition to a new regulatory framework under the New Rail Financing Framework," the statement said.

The deal has been structured as a scheme of arrangement.

This offers more certainty to a potential buyer, who will get all or none of the company.

Most takeover bids are made through a general offer, which does not guarantee a 100 per cent stake even if the buyer gains majority control.

For Temasek's bid to succeed, a majority of shareholders present at a meeting have to vote for it. These shareholders will have to hold at least 75 per cent of the value of SMRT shares held by all shareholders present at the meeting.

Credit Suisse is advising Temasek on the deal, while Bank of America Merrill Lynch is advising SMRT.

A trading halt of SMRT's shares was called last Friday, and trading will resume on Thursday.

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