Keppel lets its SPH bid ride, despite Cuscaden Peak upping the ante

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Despite Cuscaden Peak upping the ante on its bid for SPH, Keppel Corp. said Tuesday it was letting its existing offer of S$2.351 in cash and shares ride, calling it “firm and irrevocable,” and providing the shortest time to pay out for shareholders.

“We believe that Keppel’s final offer is a compelling one and a win-win proposition which would be put to both Keppel Corporation’s and SPH’s shareholders for their respective decisions,” Keppel said in a filing to SGX.

“We will continue to maintain price discipline, and will not go beyond the proposed acquisition’s intrinsic value to Keppel,” the company said.

Although SPH’s independent directors have preliminarily recommended shareholders accept Cuscaden’s bid, calling it “superior,” SPH’s shareholders must first reject Keppel’s bid at an upcoming meeting.

Cuscaden’s apparent winning bid — which values SPH at S$3.9 billion — will give shareholders the choice of either S$2.40 a share, including S$1.602 in cash and 0.782 SPH REIT unit valued at S$0.798 each, or an all-cash offer of S$2.36, according to filings to SGX Monday. The valuation of the SPH REIT component of the offer is based on the REIT’s closing unit price of S$1.02 on Friday.

Last week, Keppel Corp. had 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.

Keppel’s second offer had increased the cash component 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 reiterated Tuesday that its final offer of S$2.351 an SPH share was a “compelling” 57 percent premium to SPH’s undisturbed trading price at end-March, and that Keppel has already obtained the needed regulatory approvals in Australia and Singapore.

“Keppel’s offer provides the shortest time to pay-out by mid-January 2022 for SPH’s shareholders if our deal is approved,” the company said.

Cuscaden said Monday it has already submitted applications to the Monetary Authority of Singapore for approval of the REIT acquisition, to IMDA for approval of the indirect acquisition of the M1 stake and to the Australian Foreign Investment Review Board (FIRB), the filing said.

Keppel also noted SPH’s shareholders would receive cash distributions from SPH REIT and Keppel REIT if shareholders accept its offer, in addition to receiving the Keppel REIT units at a 10 percent discount to its net asset value as of end-September. The two REIT’s would have accrued distributions to be paid out next year, if Keppel’s bid is accepted, the filing Tuesday said.

In addition, Keppel said its own shareholders would benefit from the acquisition of SPH.

“This presents Keppel with an opportunity to acquire a quality platform that is strongly aligned and complementary to the Keppel Group’s business model and capabilities, and that the Keppel Group is uniquely placed to grow and unlock value from SPH’s portfolio,” Keppel said.

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.