Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Singapore Press Holdings, Afterpay, Link Admin, Razer, AusNet, 51job

Travis Lundy

Last week, Cuscaden Peak Pte. Limited - an entity led and 40% owned by tycoon Mr. Ong Bong Seng's Singapore-listed Hotel Properties Ltd, with the remaining 60% split between the Capitaland parent company (Temasek-backed), and 30% Mapletree Investments - a S$66bn property owner-manager with four listed S-REITs and 6 PE real estate funds (also Temasek-backed) - announced a counterproposal for <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> at S$2.10/share in cash, topping the Scheme Consideration in the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> Offer.
This was discussed in <a href="https://www.smartkarma.com/insights/sph-lobang-holders-so-shiok-bidders-so-kiasu-this-may-not-be-the-end" target="_blank" data-smartkarma-citation="insights:59725" rel="noopener">SPH Lobang - Holders So Shiok, Bidders So Kiasu. This May Not Be The End.</a> 
The Cuscaden Offer was, in my mind, a teaser. The original Keppel Offer presentation said that the "value" was S$2.099/share and the market value of the Keppel Offer Consideration was S$2.086/share. This was a tenth of a cent higher than the original and less than 1% higher than the existing consideration.
The "problem" for Cuscaden in offering such a price was that arbitrageurs who may have had the trade on would need to buy back <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a> shares which they would have shorted to put on the arb - a good arb as discussed in <a href="https://www.smartkarma.com/insights/sph-shareholders-approve-spinoff-there-s-still-a-spread-to-earn" target="_blank" data-smartkarma-citation="insights:57504" rel="noopener">SPH Shareholders Approve Spinoff - There's Still a Spread To Earn</a> about 8 weeks ago. That would mechanically force the REIT prices higher, pushing the Keppel Scheme Consideration higher - perhaps more than 1% higher. 
Indeed it did. On Friday while SPH was suspended, the two REITs in the Consideration Basket gained in price and the value of the Keppel Consideration rose through S$2.10/unit. Keppel also <a href="https://links.sgx.com/FileOpen/KCL%20Announcement_Possible%20Offer%20for%20SPH_291021.ashx?App=Announcement&amp;FileID=688663" target="_blank" rel="noopener">announced</a> it would review and respond in due course. 
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/114/original/Screenshot+2021-11-02+at+9.39.33+AM.png?1635817187" class="editor-image img-responsive" data-smartkarma-image-id="239114"></figure>
</section>
Overnight, Cuscaden has announced the calculations for their Possible Chain Offer for <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>.

Last week, Cuscaden Peak Pte. Limited - an entity led and 40% owned by tycoon Mr. Ong Bong Seng's Singapore-listed Hotel Properties Ltd, with the remaining 60% split between the Capitaland parent company (Temasek-backed), and 30% Mapletree Investments - a S$66bn property owner-manager with four listed S-REITs and 6 PE real estate funds (also Temasek-backed) - announced a counterproposal for Singapore Press Holdings (SPH SP) at S$2.10/share in cash, topping the Scheme Consideration in the Keppel Corp (KEP SP) Offer.
This was discussed in SPH Lobang - Holders So Shiok, Bidders So Kiasu. This May Not Be The End. 
The Cuscaden Offer was, in my mind, a teaser. The original Keppel Offer presentation said that the "value" was S$2.099/share and the market value of the Keppel Offer Consideration was S$2.086/share. This was a tenth of a cent higher than the original and less than 1% higher than the existing consideration.
The "problem" for Cuscaden in offering such a price was that arbitrageurs who may have had the trade on would need to buy back Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP) shares which they would have shorted to put on the arb - a good arb as discussed in SPH Shareholders Approve Spinoff - There's Still a Spread To Earn about 8 weeks ago. That would mechanically force the REIT prices higher, pushing the Keppel Scheme Consideration higher - perhaps more than 1% higher. 
Indeed it did. On Friday while SPH was suspended, the two REITs in the Consideration Basket gained in price and the value of the Keppel Consideration rose through S$2.10/unit. Keppel also announced it would review and respond in due course. 



Overnight, Cuscaden has announced the calculations for their Possible Chain Offer for SPH REIT (SPHREIT SP). 

SPH Update: Keppel, SPH REIT Chain Offer, and Cuscaden Strategy

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Today, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> announced a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share, which is a 40.0% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review), an 11.7% premium to the share price of S$1.88 on 30 July (last trading day prior to <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>’s offer) and a 5.5% premium to the share price of S$1.99 on 28 October (last close prior to the trading halt). As discussed in <a href="https://www.smartkarma.com/insights/sph-s-privatisation-by-keppel" target="_blank" data-smartkarma-citation="insights:55402" rel="noopener">SPH’s Privatisation by Keppel</a>, on 2 August, SPH announced a privatisation offer from Keppel. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>, the total consideration is S$2.104 per SPH share, a whisker above Cuscaden’s all-cash offer.  The two privatisation proposals are the culmination of the SPH’s strategic review to unlock shareholder value. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Shareholder approval for the media business restructuring was obtained on 10 September and is expected to be completed in December. While Cuscaden’s offer is broadly similar in value to Keppel’s offer, Cuscaden’s offer may be more appealing particularly to minorities. Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). Cuscaden’s offer will also not be reduced by the S$34 million break fee payable to Keppel. SPH responded to Cuscaden’s offer by stating that it is "not a firm offer" and it has "not entered into any definitive or binding agreement" with Cuscaden. Keppel responded to Cuscaden’s offer by stating that “we are reviewing the matter and make an announcement at an appropriate time.”<div class="content-highlight">In the event of a competing offer, Keppel has a switch option to proceed with the acquisition by way of an offer in lieu of proceeding with the acquisition by way of the scheme. We previously noted that the acquisition of SPH aligns with Keppel’s Vision 2030 of improving earnings quality, increasing scale and pursuing new growth initiatives. The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump its offer and start a bidding war. </div>

Today, Singapore Press Holdings (SPH SP) announced a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share, which is a 40.0% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review), an 11.7% premium to the share price of S$1.88 on 30 July (last trading day prior to Keppel Corp (KEP SP)’s offer) and a 5.5% premium to the share price of S$1.99 on 28 October (last close prior to the trading halt). As discussed in SPH’s Privatisation by Keppel, on 2 August, SPH announced a privatisation offer from Keppel. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP), the total consideration is S$2.104 per SPH share, a whisker above Cuscaden’s all-cash offer.  The two privatisation proposals are the culmination of the SPH’s strategic review to unlock shareholder value. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Shareholder approval for the media business restructuring was obtained on 10 September and is expected to be completed in December. While Cuscaden’s offer is broadly similar in value to Keppel’s offer, Cuscaden’s offer may be more appealing particularly to minorities. Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). Cuscaden’s offer will also not be reduced by the S$34 million break fee payable to Keppel. SPH responded to Cuscaden’s offer by stating that it is "not a firm offer" and it has "not entered into any definitive or binding agreement" with Cuscaden. Keppel responded to Cuscaden’s offer by stating that “we are reviewing the matter and make an announcement at an appropriate time.”In the event of a competing offer, Keppel has a switch option to proceed with the acquisition by way of an offer in lieu of proceeding with the acquisition by way of the scheme. We previously noted that the acquisition of SPH aligns with Keppel’s Vision 2030 of improving earnings quality, increasing scale and pursuing new growth initiatives. The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump its offer and start a bidding war. 

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Yoma Strategic Holdings / Equity Bottom-Up

Key Singapore Market Moves and Flows in 3Q21

The <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> Rights Offering is complete, and <a href="https://links.sgx.com/FileOpen/Announcement%20on%20Results%20of%20Rights%20Issue.ashx?App=Announcement&amp;FileID=683891" target="_blank" rel="noopener">allocations are out</a> as of Friday night.  and it turns out, the MGO Option as discussed in <a href="https://www.smartkarma.com/insights/one-more-day-to-trade-sempcorp-marine-rights-harvest-the-spread-or-buy-the-mgo-option" target="_blank" data-smartkarma-citation="insights:57287" rel="noopener">One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option</a>as rights trading was coming to a close, was the right way to think about it. Only 84.2% of the Offering was covered by shareholders exercising their rights. Temasek took 42.6%, which means that only 72% of the other shareholders took up their rights. That meant that based on the Offering Circular and the Temasek Undertakings therein, Temasek was going to end up increasing its stake by more than 1%, thereby triggering an MGO Option (it required 98.33% minority takeup to avoid going over the MGO trigger).As I described it, there was still potential risk of MGO non-completion, and the results of the Rights Issue seems to suggest there is still potential risk of MGO non-completion.More below the fold.

The Sembcorp Marine (SMM SP) Rights Offering is complete, and allocations are out as of Friday night.  and it turns out, the MGO Option as discussed in One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Optionas rights trading was coming to a close, was the right way to think about it. Only 84.2% of the Offering was covered by shareholders exercising their rights. Temasek took 42.6%, which means that only 72% of the other shareholders took up their rights. That meant that based on the Offering Circular and the Temasek Undertakings therein, Temasek was going to end up increasing its stake by more than 1%, thereby triggering an MGO Option (it required 98.33% minority takeup to avoid going over the MGO trigger).As I described it, there was still potential risk of MGO non-completion, and the results of the Rights Issue seems to suggest there is still potential risk of MGO non-completion.More below the fold.

Sembcorp Marine Rights Done - The MGO Option It Is

Singapore

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

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Keppel Corp (KEP SP)

Last Week in Event SPACE: Singapore Press Holdings, Afterpay, Link Admin, Razer, AusNet, 51job

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

SPH Update: Keppel, SPH REIT Chain Offer, and Cuscaden Strategy

Cuscaden has clarified the Chain Rule Offer Price for SPH REITs should their Scheme Proposal become effective, but they need to bid up or fold....

Travis Lundy

SPH’s Rival Offer from Cuscaden

The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump...

Arun George

Key Singapore Market Moves and Flows in 3Q21

In 3Q21, the STI saw its narrowest quarterly trading range since 3Q17, generating a 0.2% decline in total return, while the FTSE APAC Index...

Singapore Exchange Ltd (SGX)

Sembcorp Marine Rights Done - The MGO Option It Is

Sembcorp Marine Rights have been subscribed and allocated. <75% of non-Temasek shareholders took up their rights (Excess pro-rated at 47.1%). Now...

Travis Lundy

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