Cuscaden Peak: SPH bid value has appreciated against Keppel’s offer

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Cuscaden Peak reiterated that its eleventh-hour takeover bid for SPH would deliver compelling value for shareholders, compared with the competing offer from Keppel Corp., in the consortium’s responses to questions from the Securities Investors Association (Singapore) (SIAS), which were filed to SGX Sunday.

The consortium noted that the difference in value between its offer and Keppel’s has actually widened since 15 November, when SPH’s independent directors preliminarily recommended shareholders accept Cuscaden’s bid, calling it “superior,” to Keppel’s.

Cuscaden’s 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, based on unit prices at the time the offer was made.

Previously, 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.

In its filing Sunday, Cuscaden Peak noted the cash-and-share option of its bid had declined to be valued at S$2.372 as of Friday’s closing levels, but the value of Keppel’s cash-and-share offer had also fallen, and was at S$2.324 as of Friday’s closing levels.

Despite SPH’s preliminary statement Cuscaden Peak’s bid is superior, SPH’s shareholders must first reject Keppel’s bid at an upcoming meeting.

That meeting had been planned for 8 December, but was delayed, with Cuscaden Peak noting Sunday it was solely due to obtaining requisite approvals from regulators or from finalising the independent financial adviser’s opinion.

“We are working closely with SPH towards achieving successful completion of the Cuscaden Scheme expeditiously, a key factor of which will be the convening of the Cuscaden scheme meeting as soon as circumstances allow, in the interests of SPH shareholders,” the consortium said in the responses to SIAS’ questions.

Cuscaden Peak noted it has received approvals from the Foreign Investment Review Board in Australia (FIRB), and following in Keppel’s footsteps, has waived the material adverse effect (MAE) condition, “to demonstrate our strong commitment to providing SPH shareholders with greater transaction certainty.”

In the filing, Cuscaden Peak said that if its offer succeeds and the consortium ends up holding at least 30 percent of SPH REIT after the deal is completed, it would be required to make a chain offer for all of SPH REIT’s units. The minimum offer price would be S$0.964 a unit in cash, and the consortium wouldn’t be required to make a higher offer, Cuscaden Peak said.

SPH REIT ended Friday at S$0.98.

The ownership level of SPH REIT post-completion could vary between 20 percent and 66 percent, depending on SPH shareholders’ choice between the two bid options, Cuscaden Peak 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.

 

The valuation difference between the competing cash-and-share bids for SPH from Cuscaden Peak and Keppel Corp., based on 10 December 2021 closing unit prices of SPH REIT and Keppel REIT. Credit: Cuscaden Peak filing to SGX on 12 December.

The valuation difference between the competing cash-and-share bids for SPH from Cuscaden Peak and Keppel Corp., based on 10 December 2021 closing unit prices of SPH REIT and Keppel REIT. Credit: Cuscaden Peak filing to SGX on 12 December.