UPDATE: Temasek’s Startree makes mandatory offer for SembMarine at discount to share price

This item was originally published on Wednesday, 22 September 2021 at 10:14 a.m. SGT; it has since been updated to include comment from Sembcorp Marine. 

Temasek Holdings’ indirect wholly owned subsidiary Startree Investments has made a mandatory general offer (MGO) to acquire all of Sembcorp Marine’s shares it doesn’t already own for S$0.08 each in cash, Singapore’s state-owned investment company said Wednesday in an offer filed to SGX.

SembMarine’s shares were trading at S$0.083 at 9:39 a.m. SGT, down from S$0.085 at Tuesday’s close.

The offer price is at an 8 percent discount to the volume weighted average price (VWAP) of SembMarine’s shares for the month through Tuesday of S$0.087, and a 47 percent discount to its six-month VWAP, the filing said.

Startree is required to make the offer as its stake in SembMarine increased to 46.6 percent from 42.6 percent after the rigbuilder completed a S$1.5 billion renounceable rights issue at S$0.08 a share, with the shares issued Wednesday. The increased shareholding triggered an obligation to make a general offer under Singapore’s Code on Take-overs and Mergers. The mandatory general offer was required to match to rights issue price at a minimum.

Startree said the offer price is final and it will not revise it. The offer will be open for 28 days after the offer documents are dispatched — expected between 6-13 October, Startree said, adding it doesn’t intend to extend it.

“It is the current intention of Startree for Sembcorp Marine to remain listed on the SGX-ST following completion of the MGO, but Startree reserves the right to re-evaluate its position, taking into account, among other things, the level of acceptances received by Startree in respect of the MGO and the prevailing market conditions at the relevant time,” the filing said.

“It is the current intention of the offeror that the company continues with its businesses and activities in accordance with its board and management’s strategies and decisions and the offeror does not have any plans to make any material changes to the group’s businesses, re-deploy its fixed assets or to discontinue the employment of its employees,” the filling added.

The offer is conditional on receiving valid acceptances taking the Temasek subsidiary’s shareholding to exceed 50 percent, and if that threshold isn’t reached, the offer will lapse, the filing said. If the offer does become unconditional, with acceptances taking Startree’s holding above 50 percent, the closing date will not be extended, the filing said.

But Startree added that if its holding of SembMarine reaches 90 percent or higher under the offer — a level which would cause the shares to be suspended due to failure to meet the free float requirement — it would reserve the right to re-evaluate its position and wouldn’t give assurance it would take steps to maintain the listing status.

If an acquirer’s stake in a listed company reaches 90 percent, it can compulsorily acquire the remaining shares at the offer price rather than restore the free float to maintain the listing.

Startree is a wholly owned subsidiary of Fullerton Management, which in turn is a wholly owned subsidiary of Singapore’s state-owned investment company Temasek.

Morgan Stanley Asia (Singapore) has been appointed as the sole financial advisor to the deal, the filing said.

Morgan Stanley indirectly holds 4.78 million shares of SembMarine via its wholly owned subsidiary Parametric Portfolio Associates LLC.

In a separate filing to SGX Wednesday, SembMarine said it had appointed Provenance Capital as the independent financial advisor to the board for the deal. Within 14 days of the formal offer document being issued, the independent financial advisor (IFA) will provide a recommendation on the deal.

“In the meantime, shareholders are advised to refrain from taking any action in relation to their shares which may be prejudicial to their interests until they or their advisers have considered the information and the recommendations of the independent directors as well as the advice of the IFA,” SembMarine said.