On 29 October (Friday), Singapore Press Holdings (SGX: T39) announced it had received a proposal from Cuscaden Peak to acquire the company. Cuscaden Peak is a consortium of companies comprising of Hotel Properties Limited, CLA Real Estate Holdings Pte Ltd and Mapletree Investments Pte Ltd.
SPH already has a privatisation offer from Keppel Corporation made in August this year. The Keppel Corporation offer made is a combination of cash ($0.668), Keppel REIT (0.596 units) and SPH REIT (0.782 units) for each SPH share. This offer was worth $2.099 per share when it was tabled. Based on the current share price (as of 29 October, after trading hours), Keppel REIT (SGX: K71U) shares are trading at $1.13 and SPH REIT (SGX: SK6U) shares are trading at $0.98. This makes the Keppel Corporation offer currently worth about $2.10 in terms of cash and shares.
You can read more details about the Keppel Corp SPH offer here.
The latest offer from Cuscaden Peak, which according to the SPH board is “unsolicited”, is a simple proposal of $2.10 fully in cash for each SPH share.
In this article, we look at 4 things to know about Cuscaden Peak’s rival offer to acquire SPH. Do note that both Keppel Corporation and Cuscaden Peak’s privatisation offer are contingent on SPH media business being offloaded first.
#1 Cuscaden Peak Offer Of $2.10 Per Share Is An All-Cash Deal
At $2.10 per share in cash, the offer from Cuscaden Peak is an all-cash deal.
This is a contrast to Keppel Corporation’s offer, which is in the form of cash, Keppel REIT units and SPH REIT units. It’s also worth noting that the value of the Keppel Corporation offer was $2.086 as of 28 October when the Cuscaden Peak offer was submitted to the SPH Board.
As of 29 October, the Keppel Corporation offer is valued at $2.10 due to Keppel REIT’s share price going up on Friday.
Generally, all-cash deals would be favourable for shareholders as it gives them better flexibility and assurance on how much they would be getting from the acquisition as opposed to deals that include share offers, which would fluctuate depending on the share prices of the units being offered.
#2 Keppel Corporation Have The Option To Counter And To Make A Voluntary Conditional Cash Offer
As part of its conditional offer in August, Keppel Corporation also has the right at its sole discretion to make a voluntary conditional cash offer instead, in the event of a competing offer. As such, Keppel Corporation can decide if it wants to match or improve on the offer by Cuscaden Peak.
#3 Break Fee Of $34 Million Payable By SPH If Keppel Corporation Deal Does Not Go Through
One of the terms of the Keppel Corporation offer is that there would be a break fee of $34 million payable by SPH to Keppel Corporation if the SPH Board chooses to accept a superior competing offer instead of taking the Keppel Corporation deal.
What this means is that should the Cuscaden Peak, all-cash deal, get accepted. There will be a break fee of $34 million that SPH will need to pay.
This makes accepting the Cuscaden Peak offer tricky for the SPH board as it comes with some calculation that needs to be taken into consideration. If the competing offer is only slightly better than the original Keppel Corporation deal, it may not make sense to accept it because of the additional Break Fee of $34 million that SPH will need to pay.
#4 Cuscaden Peak Will Incur An Obligation To Undertake A Chain Offer For SPH REIT Shares
Unlike the Keppel Corporation offer where existing SPH shareholders will receive 0.782 units of SPH REIT shares from a distribution in-specie by SPH (this means that SPH, which owns about 65% of SPH REIT currently, will transfer about 45% of its SPH REITs shares to shareholders) if the Keppel Corporation deal goes through, the Cuscaden Peak deal is an all-cash deal.
This also means that Cuscaden Peak will be acquiring all the shares of SPH REIT that SPH currently owns (65% of SPH REIT). According to Cuscaden Peak, this will result in Cuscaden incurring an obligation to undertake a chain offer for all the units in SPH REIT.
SPH’s share price is currently trading at $1.99 as of 28 October 2021. Its share price remains flat after the announcement of the Cuscaden Peak offer.
