GK Goh founder and son launch offer to privatise company at $1.26 per share
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The move to take GK Goh Holdings private comes amid a spate of delistings on the SGX as business conditions become tougher.
PHOTO: ST FILE
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SINGAPORE – GK Goh Holdings’ founder and chairman, along with its managing director, has launched an offer to take it private at $1.26 per share in cash, valuing the investment company at $396 million.
The move comes amid a spate of delistings on the Singapore Exchange (SGX)
Executive chairman Goh Geok Khim and his son, managing director Goh Yew Lin, on Tuesday announced a voluntary conditional cash offer for all the issued and paid-up ordinary shares in GK Goh through their equally owned investment vehicle Verveine.
The offer is final, although Verveine reserves the right to revise the offer price “if a competitive situation arises”, the company said in an SGX filing.
The offer price of $1.26 per share represents a premium of 38.5 per cent over GK Goh’s last traded price of 91 cents before the company requested a trading halt on Monday.
Verveine said the implied consolidated, unaudited price-to-net asset value (P/NAV) per share of 0.97 times is above the highest P/NAV of 0.9 times during the five-year period up to, and including, the stock’s last trading day.
The P/NAV is a financial metric that is used to evaluate the relative value of a company’s shares compared with its NAV, which is the total value of a company’s assets minus its liabilities.
GK Goh’s NAV per share was $1.3033 as at Dec 31, 2022, according to its financial statements.
Verveine said its offer is final and conditional upon it amassing 90 per cent or more of the total number of shares after the offer closes. It added that it reserves the right to waive or reduce that condition to a lower level of more than 50 per cent of the total number of shares.
Both Mr Goh Geok Khim and Mr Goh Yew Lin are also directors of GKG Investment (GKGI), which is a major shareholder of GK Goh with close to a 63 per cent stake. GKGI has given an irrevocable undertaking to accept the offer.
Last year, GK Goh sold its corporate services business Boardroom
GK Goh was founded as a stockbroking business in 1979 and listed on the SGX’s mainboard in 1990. This grew into a leading regional securities business, which the company sold in 2005. Since then, GK Goh has been an investment company, with interests in areas including eldercare, property development and telecommunications, according to its website.
Explaining the rationale for the take-private offer, Mr Goh Geok Khim said it is “increasingly challenging to generate satisfactory long-term returns”.
Mr Goh Yew Lin said the company’s share price has been trading for some time at a discount to book value and added that there is little trading liquidity in the shares.
“The delisting and privatisation of the company, if achieved as a consequence of the offer, will allow us to restructure the company’s asset mix without as much pressure to deliver profits in the short term, or to incur costs relating to the company’s obligations as a listed company,” he said.
The move comes after a spate of delistings from the SGX as business conditions become tougher. Data reveals that 36 companies left the bourse in 2022, up from 22 in 2021. There were 39 that left in 2020.
It also comes after the Ministry of Finance and the Accounting and Corporate Regulatory Authority on Feb 16 accepted proposed amendments to the Companies Act to make such events fairer to minority shareholders, especially when they are faced with low-ball privatisation offers.
Under current regulations, offers must be determined by an independent financial adviser to be fair and reasonable.
The offeror and parties acting in concert with it must also abstain from voting on the delisting.
Last week, Mr David Gerald, president of the Securities Investors Association (Singapore), told The Straits Times that the number of privatisation offers could increase from now until the new rules are enforced by the authorities.
Among those making privatisation offers are engineering and property company Boustead Singapore, which last week heeded calls to lift its offer to privatise property-focused subsidiary Boustead Projects to 95 cents a share, up from its original offer of 90 cents on Feb 6.
