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Investors’ watchdog, analysts positive on proposed deal (Straits Times)

Aug 4, 2021


Keppel is proposing to acquire SPH through a privatisation offer after the hiving off of SPH's media business.

SINGAPORE – Keppel Corp’s bid to take Singapore Press Holdings (SPH) private has been described as a win-win solution by some analysts and the investor watchdog.

The Securities Investors Association (Singapore), or Sias, said the acquisition will “open up synergistic opportunities for Keppel, given the good fit between the two businesses”.

The deal values SPH at $3.4 billion, with Keppel’s share totalling $2.2 billion. Under the offer, SPH shareholders will receive a total consideration of $2.099 per share. This will comprise cash of 66.8 cents per share, and 0.596 Keppel Reit unit and 0.782 SPH Reit unit per share.

For shareholders who had bought SPH shares at $3 or $4 apiece in its heyday, the $2.099 a share offer will not make them whole, but they can still participate in the growth of the SPH and Keppel Reits under Keppel’s management, said KGI Securities investment analyst Joel Ng.

If the proposed deal goes through, Keppel Capital’s assets under management (AUM) would potentially grow from $37 billion to $47 billion through the addition of SPH Reit.

“Keppel’s shareholders will benefit from the deal. There is also less risk because Keppel is already familiar with some of SPH’s assets,” Mr Ng added.

SPH has partnered with Keppel for projects including the privatisation of telco M1 which they jointly own, and the operation of a data centre.

Analysts say Keppel’s proposed offer is an incentive for SPH shareholders to approve the transfer of SPH’s media assets to a company limited by guarantee. SPH shareholders will vote on this at an extraordinary general meeting (EGM) expected to be convened this month or the next.

Mr Terence Wong, chief executive of fund management company Azure Capital, said: “SPH shareholders have long been suffering until the strategic review. If not for the proposed demerger of the media business and this offer by Keppel, I don’t know how long it will take before they realise the value of their SPH book value.”

There will be detractors, he added. “But Keppel’s offer is fair because conglomerate stocks like SPH typically trade at a discount to RNAV (revalued net asset value). When will you see another deal like this? I would rather take the money on the table, and reinvest it elsewhere,” Mr Wong said.

He added that he believes there is “greater capacity for Keppel to make bigger dividend payouts”.

The proposed deal will take place via a scheme of arrangement to be approved by SPH and Keppel shareholders, as well as other conditions and regulatory approvals.