Keppel’s sweetened bid for SPH appears likely to succeed: Analysts

Singapore 50 dollar bill

Cuscaden Peak is unlikely to boost its cash offer for SPH to match Keppel Corp.’s sweetened bid of S$2.351 a share, said Brian Freitas, an analyst/Insight Provider who publishes on Smartkarma.

“Even if Cuscaden does come back with an all-cash offer higher than S$2.351/share, an increase in the prices of Keppel REIT and SPH REIT could keep the Keppel offer ahead and the situation interesting,” Freitas said in a note published Wednesday.

In an announcement in the wee hours of Wednesday morning, Keppel Corp. 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. 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 said the latest bid was its final offer.

Arun George, an analyst/Insight Provider at Global Equity Research Ltd. who publishes on Smartkarma, agreed that Keppel may have carried the day with its latest bid.

“Barring a material decline in the REIT unit prices, we think it will be difficult for Cuscaden to launch a more compelling all-cash offer. Overall, we think that Keppel’s final offer has a good probability to be the winning bid,” George said in a note Wednesday.

Who is Cuscaden Peak?

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