OCBC: Some shareholders should accept Wheelock Properties general offer

Singapore two-dollar bills

With Star Attraction setting a final price and final closing date for its general offer for Wheelock Properties (Singapore) shares, whether shareholders should accept depends on when they bought, OCBC said in a note on Tuesday.

OCBC noted that due to the gap between the offer price of S$2.10 a share and its fair value estimate of S$2.34, it had previously encouraged investors to reject the offer.

“We continue to see the offer price as low relative to our fair value. At the same time, we also recognize that the general offer presents a unique opportunity for shareholders to realize a profit in a very short period of time,” OCBC said.

OCBC said it now has a two-tiered recommendation: For shareholders who are in the money, it recommends accepting the offer and switching to other, more attractive plays, such as CapitaLand and UOL.

It noted that the S$2.10 offer price was still a premium of 20.7 percent over the stock’s last transacted price before the general offer was announced. The stock closed at S$2.10 on Tuesday after having recently traded above the offer price.

But for shareholders who bought Wheelock Properties shares after the general offer was announced, paying more than S$2.10, OCBC said it recommended waiting for a potential second and better general offer, although it noted this carried risks.

“In this instance, shareholders may look to Vard Holdings as an example of an ongoing privatization case which has seen two general offers by the same offeror,” OCBC noted.

Whether Star Attraction, a wholly-owned indirect subsidiary of Hong Kong real estate giant Wheelock and Company, comes back with a better offer later would depend on how eager it is to delist Wheelock Properties, OCBC said.

OCBC also pointed to a third option: If the offeror’s stake climbs over 90 percent before the offer closes, it gains the right to compulsorily acquire the remaining shares at S$2.10 each, and even if it doesn’t exercise the right, remaining shareholders gain the right to require it to do so.

As of the close of Tuesday, the offeror owned, had agreed to acquire or had valid acceptances of 81.32 percent of Wheelock Properties’ shares, according to an SGX filing after the market close.

The final offer closing date is the close of business on 2 October.

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