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My view on the takeover of SPH by Keppel Corp
03 Aug 2021 (725 views)

I hold SPH shares. It traded at $1.88 on 1 August before the announcement of the proposed takeover by Keppel Corp.

Based on this news report, the takeover will result in each shareholder of 1,000 SPH shares getting a total of $2.099 (say $2.10) in cash and REITS. It represents an appreciation of 12% over $1.88.

https://www.straitstimes.com/business/companies-markets/keppels-privatisation-offer-what-an-sph-shareholder-with-1000-shares-can

The news report quoted a statement from CEO Ng that the offer price represents a premium of 40% over the SPH share price on 30 March. 

I think that it is more appropriate to compare the offer price with the market price on 1 August, i.e. the premium is 12%.

Based on this website, the book value per share is $2.52.

In comparison, the SPH share price is $1.88 and the offer price from Keppel Corp is $2.10.

This takeover offer means that the shareholder will gain $0.22 (difference between $2.10 and $1.88) and Keppel Corp will gain $0.42 (difference between $2.52 and $2.10. This assumes that the value of the assets represent the true value of SPH.

The offer price comprise of 30% paid in cash and 70% in REITS (SPH and Keppel REITS) which are valued at their asset value.

After the takeover, the SPH shareholder gains by $0.22 and has to hold the rest of the offer price in REITS which are valued at their asset value.

It appears that the SPH shareholder will give up $0.64 in assets for a gain of $0.22.

My view - it is better for SPH shareholders to hold their existing SPH shares, instead of the package offered by Keppel Corp.

The chart below shows the price of SPH shares over the past 15 years. During this period, the average price appears to be around $4. This might represent the average cost of SPH shares held by the existing shareholders. We need to check if this lower asset value is correct.

Latest.
According to this analysis, the net asset per SPH share is $2.08 (instead of $2.53). If this is the case, then the offer is quite attractive to the SPH shareholder. 


Note - this is just a personal view. I am not giving investment advice regarding this proposed takeover.

Tan Kin Lian


My view on the takeover of SPH by Keppel Corp
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I hold SPH shares. It traded at $1.88 on 1 August before the announcement of the proposed takeover by Keppel Corp.

Based on this news report, the takeover will result in each shareholder of 1,000 SPH shares getting a total of $2.099 (say $2.10) in cash and REITS. It represents an appreciation of 12% over $1.88.

https://www.straitstimes.com/business/companies-markets/keppels-privatisation-offer-what-an-sph-shareholder-with-1000-shares-can

The news report quoted a statement from CEO Ng that the offer price represents a premium of 40% over the SPH share price on 30 March. 

I think that it is more appropriate to compare the offer price with the market price on 1 August, i.e. the premium is 12%.

Based on this website, the book value per share is $2.52.

In comparison, the SPH share price is $1.88 and the offer price from Keppel Corp is $2.10.

This takeover offer means that the shareholder will gain $0.22 (difference between $2.10 and $1.88) and Keppel Corp will gain $0.42 (difference between $2.52 and $2.10. This assumes that the value of the assets represent the true value of SPH.

The offer price comprise of 30% paid in cash and 70% in REITS (SPH and Keppel REITS) which are valued at their asset value.

After the takeover, the SPH shareholder gains by $0.22 and has to hold the rest of the offer price in REITS which are valued at their asset value.

It appears that the SPH shareholder will give up $0.64 in assets for a gain of $0.22.

My view - it is better for SPH shareholders to hold their existing SPH shares, instead of the package offered by Keppel Corp.

The chart below shows the price of SPH shares over the past 15 years. During this period, the average price appears to be around $4. This might represent the average cost of SPH shares held by the existing shareholders. We need to check if this lower asset value is correct.

Latest.
According to this analysis, the net asset per SPH share is $2.08 (instead of $2.53). If this is the case, then the offer is quite attractive to the SPH shareholder. 


Note - this is just a personal view. I am not giving investment advice regarding this proposed takeover.

Tan Kin Lian