UPDATE: Keppel sweetens bid for SPH, topping Cuscaden Peak’s competing offer

Singapore one dollar bill

This item was originally published on Wednesday, 10 November 2021 at 1:26 a.m. SGT; it has since been updated with more details. 

Keppel Corp. has sweetened its bid to acquire SPH to S$2.351 a share, in a cash-and-share offer, topping its previous bid of S$2.099 and a competing bid of S$2.10 in cash from Cuscaden Peak.

The fresh bid increased the cash component of Keppel’s offer by S$0.20 a share, to S$0.868, as well as including 0.596 Keppel REIT unit and 0.782 SPH REIT unit, according to a filing to SGX early on Wednesday.

Keppel noted improving stock market conditions have boosted the cumulative value of Keppel REIT’s and SPH REIT’s units since the initial offer was made.

Keppel’s revised offer now values the 0.782 SPH REIT unit at S$0.798, the 9 November closing price, up from S$0.716 previously, while the 0.596 Keppel REIT unit is now valued at S$0.685, down from S$0.715 previously.

“SPH acknowledges that Keppel’s final offer is superior to the competing offer from Cuscaden Peak and will undertake to call for the SPH scheme meeting,” Keppel said in a filing to SGX. The meeting is set to be held in early December, by 8 December at the latest, the filing said.

“Keppel’s final consideration provides SPH shareholders with a compelling offer, with the highest deal certainty and, if the transaction is approved, the fastest payout,” Keppel’s filing said, adding the deal was expected to be completed by early January. Keppel noted many of the required regulatory approvals for its bid have already been completed, while Cuscaden Peak doesn’t yet have the approvals for its offer.

“SPH shareholders will be able to participate in the potential growth of both Keppel REIT and SPH REIT as well as receive distributions from Keppel REIT and SPH REIT following the completion of the proposed transaction,” the filing said. “Keppel continues to believe that the Keppel Group is uniquely positioned to enhance and unlock value of SPH’s portfolio.”

Keppel added the deal remains attractive and earnings accretive as global economic conditions have strengthened as many countries are lifting Covid-19 restrictions, helping drive an improvement in SPH’s portfolio performance, as disclosed in SPH’s recent full-year results.

Loh Chin Hua, CEO of Keppel Corp., said the amount of increased gearing to boost the deal’s cash component was “marginal,” and the company would still be able to pursue other growth opportunities in areas including renewables and decarbonisation, as well as to reward shareholders.

Keppel said its fresh offer was final and would not be increased.

To be sure, SPH has been engaging in discussions with Cuscaden Peak since its 29 October announcement of the competing bid.

If Cuscaden Peak makes a superior offer and conclude an implementation agreement by 16 November, SPH will “consider the merits of such a revised proposal and act accordingly,” SPH said in a separate filing to SGX.

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. Mapletree Investments is wholly owned by Singapore state-owned investment company Temasek.

Cuscaden Peak is 40 percent owned by Tiga Stars, 30 percent by Adenium and 30 percent by Mapletree Fortress. Tiga Stars is 70 percent owned by Hotel Properties, with the remainder held by Como Holdings, which is ultimately owned by Ong Beng Seng, who is the controlling shareholder of Singapore-listed Hotel Properties. Adenium is wholly owned by CLA Real Estate Holdings, which is an independently managed portfolio company of Temasek