Cuscaden Peak’s bid for SPH may be more appealing to minority holders: Analyst

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Consortium Cuscaden Peak’s offer for SPH may be more attractive to minority shareholders, despite being broadly similar in value to Keppel Corp.’s rival bid, Arun George, an analyst/Insight Provider at Global Equity Research who publishes on Smartkarma, said in a note Friday.

The consortium’s offer, coming in at S$2.10 a share in cash, only slightly pips Keppel Corp.’s bid, according to the announcement Friday.

That compares with Keppel’s bid of S$0.668 in cash and 0.596 Keppel share. As part of Keppel’s offer, SPH would also distribute 45 percent of SPH REIT to shareholders, or 0.782 SPH REIT for every SPH share held. In August, when the Keppel bid was made, that translated to an implied value of S$2.099 for every SPH share. Keppel’s bid was valued at S$2.2 billion.

Cuscaden Peak’s bid may have a “cash is king” element in its favor.

“Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does [not] require [any] further shareholders’ approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders),” George said in the note.

George said that on a sum-of-the-parts basis, Global Equity Research valued SPH at S$2.08 a share post-media business restructuring, which will see the media assets hived off into a non-profit.

“Consequently, Cuscaden’s offer of S$2.10 cash per share is fair,” he said.

But he noted the possibility Keppel won’t back away.

“The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump its offer and start a bidding war,” he said.

The consortium bidding against Keppel, called Cuscaden Peak, includes Tiga Stars, a wholly owned subsidiary of tycoon Ong Beng Seng’s Hotel Properties, and Adenium, which is a wholly owned subsidiary of Temasek portfolio company CLA Real Estate Holdings, as well as Mapletree Investments‘ indirect wholly owned subsidiary Mapletree Fortress, the consortium said. Mapletree Investments is wholly owned by Singapore state-owned investment company Temasek.

Temasek owns 20.99 percent of Keppel as of 9 July, making it the largest single shareholder, according to SGX data.