The Singapore Airlines (SIA) offer for listed subsidiary Tiger Airways is "not reasonable", according to an advocate for small investors.
The Securities Investors Association Singapore (Sias) has urged Tigerair's board to ensure minority shareholders get a fair return.
SIA, which owns 55.8 per cent of Tigerair, is offering 41 cents in cash for each share in the budget carrier it does not already own, with an eye to taking it private.
SIA's offer price is 32.3 per cent higher than the budget carrier's closing price of 31 cents on Nov 5, the day before the offer was made.
But the price is also 39 per cent lower than what long-term minority shareholders have paid for Tigerair shares since its 2010 listing, wrote Sias president and chief executive David Gerald in a statement yesterday.
He said: "A Tiger Airways shareholder who held onto his IPO (initial public offering) shares that were bought for $1.50 a share and subscribed to all three rights issues since IPO would have paid an average of 67 cents a share.
"(SIA's) offer, the minority feels, is not reasonable."
Mr Gerald also noted that in 2013, SIA had bought out Temasek Holdings' 7 per cent stake in Tigerair for 67.8 cents apiece.
That same year, minority shareholders approved a whitewash waiver for SIA to become controlling shareholder of Tigerair without making a mandatory general offer. SIA bought perpetual convertible securities that were eventually converted to shares at $0.565 per share last year.
"While Sias understands that the current market conditions are different, the minority shareholders' interest must be taken into account," Mr Gerald wrote.
"Therefore, Sias calls upon the board of Tiger Airways to carefully review the SIA offer to ensure that the minority is dealt with fairly."
SIA is also offering Tigerair shareholders an option to subscribe for SIA shares at $11.1043 apiece, a 0.4 per cent discount to SIA's closing price of $11.15 on Nov 5.
Mr Gerald advised minority shareholders to wait for the report from the independent financial adviser appointed by Tigerair to determine the fairness of the offer.