UPDATE: Keppel’s bid for SPH takes blow as waiting period for Cuscaden vote is struck down

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This item was originally published on Wednesday, 22 December 2021 at 21:45 SGT; it has since been updated to include comments from SPH. 

Keppel Corp.’s attempt to take over SPH suffered a setback Wednesday, with a ruling striking down its offer’s condition for SPH shareholders to  vote on its bid eight weeks before a meeting can be held on the competing bid from Cuscaden Peak.

It’s the latest wrinkle in a bidding war that emerged after Cuscaden Peak crashed Keppel’s party just before last call.

The Securities Industry Council (SIC) has ruled that the clauses of Keppel’s offer delaying the vote on Cuscaden’s bid “shall have no effect and shall be disregarded,” Keppel said in a filing to SGX Wednesday.

Keppel said it would abide by the ruling.

“The offeror believes that these arrangements were in keeping with the integrity of the thorough auction process ran by SPH as part of the strategic review of SPH’s businesses, which resulted in the offeror being selected as the preferred bidder,” Keppel said in the statement.

“While the offeror is disappointed at the outcome of the SIC ruling, the offeror maintains that the Keppel scheme is a win-win proposition for shareholders of both Keppel and SPH,” the company added.

SPH said Wednesday that in light of the SIC ruling, it would prepare the documents and seek clearance from regulators and the court to convene a meeting to vote on the Cuscaden Peak offer “as soon as reasonably practicable.”

Keppel noted the clauses requiring SPH shareholders to vote on its bid by 8 December unless a “specified event” delays it — as it has — remain in force. A specified event would include regulatory approval, such as from the SIC, or waiting for a final opinion from the independent financial advisor (IFA); SPH has not clarified what has caused the delay.

The decision on whether to approve the Keppel bid “should be a matter that is left to SPH’s shareholders,” Keppel said, adding it looks forward to SPH taking all necessary steps to convene the meeting as soon as the delay has been resolved, citing the 2 February cut-off date for the offer.

SPH’s independent directors have preliminarily recommended shareholders accept Cuscaden’s eleventh-hour bid, calling it “superior,” to Keppel’s, but Keppel’s deal terms had required its offer get a vote at an extraordinary general meeting (EGM) of SPH shareholders first.

Cuscaden Peak’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.

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.