UPDATE: Temasek makes bid to raise Keppel stake to 51 percent in more than S$4B deal

Sign at Temasek earnings briefingSign at Temasek earnings briefing In July 2018

This article was originally published on Monday, 21 October 2019 at 14:51; it has since been updated with more details.

Singapore state-owned investment company Temasek said Monday it is making a bid to increase its stake in Keppel Corp. to 51 percent via a S$7.35 a share cash offer in a more than S$4 billion deal.

The offer price would represent a nearly 26 percent premium to Keppel’s last traded share price of S$5.84 on Friday.

Temasek currently has a direct interest of 371.41 million Keppel shares, or a 20.45 percent stake, while some of its subsidiaries hold 18.84 million shares, or a 1.04 percent stake, Temasek said in a filing to SGX.

Once the deal is complete, Temasek and its subsidiaries would end up with around 52.04 percent of Keppel, the filing said.

That means Temasek is aiming to acquire a 30.55 percent stake, or around 554.94 million shares, the filing said.

”The partial offer reflects over view that there is inherent long-term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” Tan Chong Lee, president of Temasek International, said in the statement.

He added the partial offer would only be made after the pre-conditions were met, which could take several months.

The deal is conditional upon Temasek receiving enough acceptances to result in it having a 51 percent stake and upon the approval of independent shareholders as well as upon regulators’ approval, the filing said.

The offer is also conditional upon Keppel’s financial performance not deteriorating materially in the interim.

Keppel’s earnings disappointed some analysts. Last week, Keppel reported its third quarter net profit dropped 30 percent on-year to S$159 million, mainly on year-ago gains from divesting a commercial development in Beijing and higher net interest expense.

Temasek said the partial offer would give Keppel’s shareholders the chance to realise part of their investment at a premium to the stock’s last traded price of S$5.84 on Friday. The investment company said it does not plan to take the company private or delist it.

It added that Temasek’s long-standing governance model has been to support the independent operation of its portfolio companies, and it doesn’t involve itself in the companies’ operations or business decisions.

However, Temasek added it plans to work with Keppel to undertake a comprehensive strategic review, which could result in mergers, joint ventures, divestments or other transactions.

The offer will be made through Temasek’s subsidiary, Kyanite Investments, the filing said.

Morgan Stanley Asia (Singapore) is the sole financial adviser to Temasek for the deal, the filing said.

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