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In battle royal for SPH, Cuscaden is poised for victory

In battle royal for SPH, Cuscaden is poised for victory

Source: Straits Times
Article Date: 16 Nov 2021
Author: Ven Sreenivasan

The latest Cuscaden offer represents a premium of 10.1 per cent over SPH's financial year 2021 pro forma net asset value per share of $2.18.

The battle royal for Singapore Press Holdings (SPH) seems to be coming to its conclusion with hotelier Ong Beng Seng-led Cuscaden Peak poised to clinch the property group with his sweetened offer of up to $2.40 per SPH share.

Cuscaden, a consortium comprising Mr Ong's investment vehicle, a unit of Mapletree group and the controlling shareholder of CapitaLand, has put two options on the table.

One is a $2.36 all-cash offer.

The second is $1.602 in cash and 0.782 in SPH Reits. Given current valuations, this is worth $2.40 per SPH share.

The new Cuscaden offer values SPH at up to $3.9 billion, versus $3.8 billion from the $2.351 cash-plus-shares final bid put forward by Keppel Corp last week.

Keppel had originally offered $2.099 for SPH last month, but this was countered by Cuscaden Peak with an all-cash $2.10 offer weeks later.

The latest Cuscaden offer represents a premium of 10.1 per cent over SPH's financial year 2021 pro forma net asset value per share of $2.18.

It is likely to trigger a chain offer for all outstanding SPH Reits at 96.4 cents.

Cuscaden said its offer will not be adjusted for the 3 cents per share dividend due to be paid to SPH shareholders. Nor will it be adjusted for a $34 million break fee that would be payable to Keppel if Cuscaden succeeds.

So what next?

SPH, taking the advice of its independent financial adviser, has acknowledged that the Cuscaden offer is superior to Keppel's.

Its independent directors' preliminary recommendation is for shareholders to vote against the Keppel scheme and in favour of the Cuscaden scheme.

SPH chief executive Ng Yat Chung said Cuscaden's new offer represents a substantial premium of 60 per cent over SPH's undisturbed price as at March 30 before the announcement of the strategic review.

So SPH will now proceed to hold a scheme of arrangement meeting with its shareholders on Dec 8, putting up the Keppel offer for vote.

If that is rejected by shareholders - as seems likely - SPH will be obliged to put forward the Cuscaden Peak offer for shareholders' vote.

So what should shareholders do?

Assuming no new offer surfaces on Tuesday (Nov 16), the final day of submissions for any more scheme offers, SPH shareholders have two choices: Keppel's cash-plus-Reits offer of $2.351 per share, or Cuscaden Peak's two options.

Of course, there is a possibility - but little probability - of a new general offer surfacing by Dec 1.

So, given the sum of probabilities, there will be only two votes to be made by shareholders on Dec 8: accept or reject Keppel's offer, then decide on Cuscaden Peak's offer.

Keppel has already said its $2.351 offer is final, and will not be revised. So there is a possibility that given the latest developments it could pull out of this scheme altogether.

If not, shareholders seeking the highest valuation will first have to reject the Keppel scheme. Next, they will have to vote to accept the Cuscaden scheme.

After that comes the vote to elect one of the two Cuscaden schemes: cash-plus-Reits option valuing SPH at $2.40 per share, or the $2.36 per share all-cash offer.

One more thing to note: Cuscaden's completion date will likely be in mid-Feburary as it is still in the process of seeking regulatory approvals.

Keppel, which previously obtained approvals when it submitted its scheme, will pay out SPH shareholders by mid-January.

The ball is now in SPH shareholders' court.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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