Great Eastern shareholders to vote for delisting or trading resumption; OCBC makes $30.15 exit offer

SINGAPORE – Great Eastern Holdings’ minority shareholders will be able to vote on the delisting of the insurance company or resumption of trading, nine months after its shares were suspended from trading on the Singapore Exchange (SGX).

If they vote to delist, OCBC will make a $900 million exit offer for Great Eastern, or $30.15 per share, for the remaining 6.28 per cent of the shares it does not own. This is up from its original $25.60 per share offer in May 2024.

OCBC’s exit offer has been assessed as fair and reasonable by Ernst & Young, the independent financial adviser (IFA) appointed by Great Eastern. According to SGX listing rules, an offer must be both fair and reasonable before a company can delist.

An RHB research analyst told The Straits Times that there is a favourable outlook for the offer this time.

“Given that the offer is considered fair and reasonable by the independent financial adviser, offers exit multiples that appear in line with peers, and comes at a 17.8 per cent premium to the previous offer price, there is a good chance the offer could succeed this time,” the analyst said.

OCBC in May 2024 launched a $1.4 billion bid to privatise Great Eastern by acquiring the remaining 11.56 per cent stake it did not own at $25.60 per share.

However, the bank’s accumulated stake by the end of the offer in July 2024, at 93.7 per cent, was insufficient for it to compulsorily acquire the rest of Great Eastern’s shares.

Some minority shareholders refused to accept the $25.60 per share offer, saying it undervalued the company. An IFA also concluded that at those levels, the offer was unfair but reasonable.

Great Eastern lost its required 10 per cent minimum free float, resulting in the trading suspension of the insurer’s shares.

To bridge the impasse, minority shareholders will now have to vote on whether to delist Great Eastern at an extraordinary general meeting (EGM) likely to be convened in July.

“The outcome of the delisting resolution will be determined solely by Great Eastern’s minority shareholders as OCBC and its concert parties will abstain from voting,” the insurer said.

The delisting will require the approval of a majority of at least 75 per cent of the total number of shares held by minority shareholders present and voting in person or by proxy at the EGM.

If the delisting resolution is approved at the EGM, shareholders who then choose not to accept the exit offer will continue to hold shares in Great Eastern, which will become an unlisted company following the delisting.

OCBC said it does not intend to revise the exit offer price. If the delisting resolution is not approved at the EGM, the delisting will not proceed and the exit offer will lapse.

Great Eastern’s independent directors intend to recommend that shareholders vote in favour of delisting and accept the exit offer.

However, if the delisting resolution is not approved, minority shareholders will then be asked to vote for the resumption of trading of Great Eastern’s shares.

This will also be subject to the approval of at least 75 per cent of the votes at the EGM.

The RHB research analyst said minority shareholders need to be mindful that trading liquidity for the stock will likely be very thin, if trading were to resume.

Under the resumption of trading resolution, Great Eastern will undertake a proposed bonus issue where shareholders will receive bonus ordinary shares in respect of their shares unless they elect to receive Class C non-voting shares.

In the event that delisting is not approved, OCBC intends to vote in favour of trading resumption and will opt to receive Class C shares at the request of Great Eastern.

By doing so, OCBC will dilute its own shareholding of voting shares in Great Eastern to 88.19 per cent, which will help to restore Great Eastern’s free float and allow trading to resume.

However, OCBC will still retain its rights to 93.72 per cent of the economic interests in Great Eastern, which includes its right to receive Great Eastern dividends, as the Class C shares rank equally with all ordinary shares in respect of dividends and distributions, the bank said.

OCBC group chief executive Helen Wong said: “While we have never wavered in our strategic intention to delist Great Eastern, this offer is made to avail to Great Eastern shareholders the opportunity to exit the stock after an 11-month suspension in share trading.”

She added that OCBC is making a fair and reasonable offer in compliance with listing rules to support Great Eastern’s proposal to delist.

“At the same time, we are able to continue to protect the interests of our own shareholders as we realise our ambition of building an integrated financial services group that will lead the region’s wealth management industry.”

Analysts covering OCBC told ST that a delisting of Great Eastern would bode well for the bank.

Macquarie Group’s head of Asean equity research Jayden Vantarakis noted that the OCBC group could benefit from higher consolidated profits and a more streamlined capital structure if a full takeover and delisting of Great Eastern takes place.

Morningstar senior equity analyst Michael Makdad said if OCBC is able to obtain full control of Great Eastern, it will make it easier for OCBC to leverage the insurer’s extensive agency network in Singapore and Malaysia to cross-sell products and services and accelerate the bank’s wealth management growth.

Shareholders of Great Eastern who accepted the bank’s original offer may not have got such a good deal though.

The Securities Investors​ Association (Singapore), or Sias, noted that shareholders who accepted the $25.60 exit offer will not receive any further compensation, and said in a June 6 statement that it is disappointed with the outcome.

“Great Eastern shareholders who were unable to withstand the trading suspension have ultimately lost out on realising a fair value for their Great Eastern shares,” it said.

Sias also noted that the trading suspension has severely limited shareholders’ ability to make investment decisions, rebalance portfolios or exit their positions, and urged regulators to further refine rules to provide stronger safeguards for shareholders.

It called on existing minority shareholders to review the terms of the new offer carefully and make informed decisions accordingly.

Shares of OCBC rose five cents to $16.28 on June 6.