Aggrieved Singapore Press Holdings (SPH) shareholders may feel slightly different today after Keppel Corp made a SGD 2.2 billion (USD 1.6 billion) offer to buy out and delist the company.
Apart from its loss-making media business, which is not part of the Keppel deal, SPH is involved in aged home care and student accommodation in Singapore and overseas, and shopping malls in Singapore and Australia via SPH REIT.
It also has a myriad of investments across various sectors from pre-school education, e-commerce car sales, to telecommunications, where it owns M1 together with the Singapore government-backed Keppel.
There are 4 key conditions that must be met for the take-private to be completed by December 2021.
Divestment of SPH’s Media Business
SPH has been under scrutiny since March 2021 when it announced a strategic review of the overall business given the continued poor performance of its loss-making media business.
In May 2021, it announced plans to drop the declining media business from its balance sheet and focus on its accretive real estate focused businesses, which should’ve been a positive.
But shareholders were up in arms, as instead of selling its unwanted business for a fee, SPH said It will pay to transfer the media business into a not-for-profit entity.
The EGM for shareholder approval is scheduled for August 2021. The deal should be completed 3 – 6 months after the EGM.
The divestment of the SPH’s media business is crucial to Keppel’s bid.
SPH shareholders will vote on the deal, as well as distribution of the SPH REIT units, in a scheme scheduled for October / November 2021.
Keppel will pay SPH shareholders SGD 0.668 in cash and 0.596 Keppel REIT unit for each share, while SPH will distribute 0.782 SPH REIT unit for each share.
In all, the bid valued SPH at SGD 2.099 per share, compared to its closing price of SGD 1.88 prior to the offer.
And receiving SPH and REIT units will give also shareholders an opportunity to benefit from future recovery of the retail and commercial sector.
In all, it is a decent offer for SPH shareholders who want to exit from a languishing position.
SPH has a diverse shareholder base as it is bound by the Newspaper and Printing Presses Act where no shareholder could own more than 5% of the voting shares in SPH without government approval.
Keppel shareholders will vote on the deal in an EGM scheduled for October / November 2021.
Keppel, 20.4% owned by Temasek Holdings, said the SPH’s real estate investments immediately enhances its asset management business.
It will own 20% of Keppel REIT and SPH REIT following the deal.
Approvals are needed from the Singapore Securities Industry Council, Singapore stock exchange for the potential delisting, the Monetary Authority of Singapore for a change in control of the SPH REIT Manager, and clearance from Australia’s Foreign Investment Review Board given SPH REIT’s properties in the country.
No Material Adverse Effect
SPH’s consolidated net asset value cannot fall by more than SGD 540.3 million, excluding any diminution arising from the media spin-off, SPH’s REIT distribution as part of the deal, and potential dividend declared.