UPDATE: Keppel proposes S$2.2B strategic acquisition of SPH

Straits Times reading sculpture at Changi AirportStraits Times reading sculpture at Changi Airport

This item was originally published on Monday, 2 August 2021 at 9:19 a.m. SGT; it has since been updated with more details. 

Correction: A previous version of this article had an incorrect figure for the cash portion of Keppel’s offer to acquire SPH. The cash consideration portion of the offer is S$0.668. 

Keppel Corp. has proposed to acquire Singapore Press Holdings (SPH), the publisher of the Straits Times newspaper, for S$2.24 billion, with a plan to delist and take the company private after carving out its media assets.

“SPH possesses a quality portfolio of businesses and assets which are strongly aligned with Keppel’s business and will complement and strengthen three out of Keppel’s four focus areas, namely Urban Development, Connectivity and Asset Management,” Keppel said in a filing to SGX Monday.

Read remarks by Keppel CEO Loh Chin Hua at the analyst and media briefing.

Keppel pointed to SPH’s assets including purpose-built student accommodation (PBSA), senior living, stakes in SPH REIT and its REIT manager and other development assets, noting the deal would also allow it to consolidate its of jointly owned assets M1 and the Genting Lane data center.

“A number of SPH’s assets are relatively stabilised and can be monetised through the Keppel-managed REITs and business trust within the next three years,” Keppel added. SPH’s media business will be divested before the deal closes.

The deal includes cash consideration of around S$1.08 billion and around 26 percent of Keppel REIT’s units valued at around S$1.16 billion, Keppel said.

SPH shareholders will be entitled to S$0.668 in cash and 0.596 Keppel REIT unit for each SPH share held, the filing said. In addition, SPH will distribute around 45 percent of its stake in SPH REIT, valued at S$1.16 billion, to SPH shareholders, while retaining a 20 percent stake in SPH REIT, the filing said, adding that works out to 0.782 SPH REIT unit for every share held.

In total, including the offer consideration and the SPH REIT unit distribution, the offer has an implied value of S$2.099 per SPH share, marking a 16 percent premium over the one-month volume-weighted average price as of end-July and an 11.6 percent premium over 30 July’s closing price, Keppel said. SPH’s shares closed Friday at S$1.88.

Ng Yat Chung, CEO of SPH, said the deal was the result of a strategic review process over many months.

“We took the first step with the media restructuring to ensure a sustainable future for the media business, while removing its losses from SPH. The next step was a thorough process to unlock and maximise value for all shareholders for the remaining company,” Ng said in a separate filing to SGX.

The media business, SPH Media, will be transferred to a public company limited by guarantee (CLG) for a nominal sum, subject to shareholder approval at an extraordinary general meeting (EGM) to be called in August or September, the SPH statement said.

“With an objective to maximise value and minimise disruption for shareholders, the board concluded that the privatisation of the entire company would be the preferred solution. It derives a better valuation outcome for all shareholders where a control premium is paid for
the entire company. Also, it avoids a situation where prime SPH assets are cherry-picked, leaving SPH with its existing debt and the risk of being unable to monetise its remaining assets,” SPH said.

After the deal, Keppel said it would hold around 20 percent stakes in Keppel REIT and SPH REIT.

The deal, which is subject to shareholder approval, is expected to be completed by year-end, Keppel said.