On Monday (2 Aug), Singapore Press Holdings (SPH) received a privatisation offer from Keppel Corporation for its non-media business through a scheme of arrangement, subject to the approval of SPH shareholders’ on the company’s media restructuring plan.
The scheme will have to be approved by both SPH and Keppel shareholders. If it goes through, SPH will be delisted and become a wholly-owned subsidiary of Keppel with the latter holding about 20 per cent stakes in both SPH Reit and Keppel Reit.
The deal values SPH at S$3.4 billion, with Keppel’s share of the deal amounts to S$2.2 billion.
The scheme offers SPH shareholders a total consideration of S$2.099 per share, made up of S$0.668 in cash per share, 0.596 Keppel Reit unit (valued at S$0.715) and 0.782 SPH Reit unit (valued at S$0.716) per share.
The price offered by Keppel is a 39.9 per cent premium on the company’s last traded price before the strategic review of SPH’s businesses, was announced earlier this year on 30 March.
In fact, it is also an 11.6 per cent premium on the last traded price as of 30 July, as well as a 21.4 per cent premium of the three-month volume-weighted average price of S$1.729 per share.
Excluding SPH’s media business, the offer price is equivalent to the company’s adjusted net asset value per share.
Beyond that, the deal will see shareholders receiving final dividends that may be declared by the board for FY2021.
Keppel’s proposal chosen because it delivers highest value for shareholders, surpassing all criteria
SPH chief financial officer Chua Hwee Song said in a media briefing yesterday that Keppel’s proposal was chosen after an evaluation of many other proposals in a “competitive two-stage process” which saw over 20 potential bidders participating.
Ultimately, SPH selected Keppel as it delivered the highest value for shareholders, and excelled in all other criteria as well, said Mr Chua.
In a press statement, SPH said that it has reviewed various strategic options including maintaining the status quo, monetising certain assets, a partial sale, or privatisation of the company after its media restructuring.
The board eventually decided that the option which provided maximum value and minimal disruption to shareholders was the privatisation of the entire company.
“It derives a better valuation outcome for all shareholders where a control premium is paid for the entire company,” the statement read.
It went on to say that this route would avoid a scenario in which SPH’s best assets are cherry-picked, leaving the company with existing debt and the risk of being unable to monetise the remaining assets.
Touching on SPH and Keppel REIT units that shareholders stand to gain, SPH said that these would allow shareholders to take part in the recovery of the retail and commercial property sector which could yield attractive dividends.
The scheme will take effect once SPH’s proposed media restructuring is successfully completed.
Earlier in May, SPH announced that it would be transferring its media business to a company limited by guarantee (CLG) as it continued to face deteriorating advertising revenue.
However, the transfer of SPH’s media assets to the CLG is subject to shareholders’ approval at an extraordinary general meeting (EGM). The meeting is expected to take place sometime in August or September this year.
If approved, the restructuring is expected to be completed by December.
Offer for privatisation from Keppel could encourage shareholders to go for media restructuring
Meanwhile, SPH chief executive officer Ng Yat Chung hinted that the offer for privatisation from Keppel could encourage shareholders to go for the media restructuring.
“I think it’s helpful to persuading our shareholders to vote for the proposed restructuring of the CLG,” said Mr Ng.
He added that having an offer on the table with a “specific value” will help shareholders with their decision-making.
However, if SPH shareholders decide not to go for the deal, nothing changes for the company. It would have to continue investing in its media business and try to salvage the declining print revenue while also attempting to grow its non-media business, said Mr Ng.
“On the other side, if they vote for the restructuring of the media business then it’s an opportunity to take advantage of this privatisation by Keppel,” he explained.
In the press statement, Mr Ng noted: “The outcome is the result of a strategic review process that has taken place over many months. We took the first step with the media restructuring to ensure a sustainable future for the media business while removing the losses from SPH.
“The next step was a thorough process to unlock and maximise value for all shareholders for the remaining company. With the privatisation offer from Keppel, shareholders now have an opportunity to realise the value of their SPH shares at a premium.”
An independent financial adviser will be appointed by SPH for its independent directors. The directors will make their final recommendations to shareholders on the Keppel scheme.
The company also plans on seeking consent from shareholders via a consent solicitation process in relation to various terms and conditions of the notes and trust deed constituting the notes.
SPH noted that the formal consent solicitation process and details will be provided at a later date. However, it stated that the consent of noteholders is not a condition for the scheme.
Credit Suisse is the financial advisor, while Allen and Gledhill is the legal advisor to SPH for the strategic review and the proposed transaction.
Responding to questions on Mr Lee’s role in the proposed deal, Mr Ng said that Mr Lee had recused himself from any decision-making and discussion concerning the Keppel deal.
Mr Lee was Keppel Chairman from 2009 to 2021, stepping down from the board just after SPH announced its strategic review but before the proposal for the CLG was released.
