Keppel Corporation has offered to privatise Singapore Press Holdings’ non-media business, which consists primarily of real estate assets, in a cash-and-scrip deal valuing the Straits Times publisher at S$3.4 billion ($2.5 billion).
Under an agreement between the two firms announced Monday, Keppel will pay S$1.08 billion in cash and S$1.16 billion in Keppel REIT units to SPH shareholders, who will also receive S$1.16 billion in SPH REIT units from the media group.
The buyout proposal comes three months after SPH announced plans to spin off its media operations into a not-for-profit unit and five months after the state-controlled conglomerate undertook a strategic review of its business after years of shifting from its newspaper roots in favour of profits from a real estate portfolio in Singapore, and new property investments overseas.
SPH also controls the manager of SGX-listed SPH REIT, a real estate investment trust which owns retail and residential properties in Singapore and Australia, as well as student accommodation assets in the UK and elder care properties in Singapore and Japan.
“This is a rare opportunity to acquire SPH’s non-media portfolio, which fits very well with Keppel’s business and growth strategy,” said Keppel chief executive Loh Chin Hua.
The state-run conglomerate, which grew from its roots as Singapore’s largest shipbuilder into a multi-branched conglomerate, is offering the equivalent of S$2.099 per SPH share, representing an 11.6 percent premium to the last traded price of S$1.88 per share on 30 July and a 21.4 percent premium to the three-month volume-weighted average price of S$1.729 per share.
The deal is contingent on divestment of SPH’s loss-making media business as revealed in May. Both SGX-listed firms must secure shareholder and regulatory approval for the transaction.
Loh pronounced Keppel “uniquely positioned” to enhance and unlock the value of SPH’s portfolio, with the company directly owning the Seletar Mall and Woodleigh Residences in Singapore, as well as student accommodation in the UK and Germany.
Through SPH REIT, it controls the Paragon, Clementi Mall, Rail Mall and other shopping centres in Singapore, as well as the Figtree Shopping Centre in Sydney and the Westfield Marion mall in South Australia.
Keppel expects the SPH properties to further enhance the asset management platform under Keppel Capital, improving the diversity of its asset classes and increasing recurring fee-based and investment income.
Keppel’s acquisition will give the group a strategic stake in SPH REIT and full ownership of the trust’s manager. Post-transaction, Keppel will hold a roughly 20 percent stake in both SPH REIT and Keppel REIT.
Firms in Flux
The proposed takeover comes as Keppel and SPH carry out transformation plans marking a shift in their strategic direction.
Keppel last year announced a management shake-up — including the promotion of Keppel Land chief operating officer Louis Lim to CEO of the development flagship and Keppel DC REIT head of investment Anthea Lee to chief executive of the data centre trust’s manager — as the group sought to unify operations that span real estate, infrastructure, offshore marine and fund management.
The new leadership is charged with implementing the Vision 2030 plan, with a focus on key sectors like energy and environment, urban development, connectivity and asset management.
“The proposed acquisition of SPH is very much in line with Keppel’s Vision 2030, where we seek to grow Keppel’s business as a provider of solutions for sustainable urbanisation through organic and inorganic options,” Loh said.
SPH’s own strategic review determined the need to restructure its media business — which includes the Straits Times, the Business Times and various newspapers published in Chinese, Malay and Tamil — and fulfil the potential of its real estate arm, culminating in the choice of Keppel as suitor.
“We took the first step with the media restructuring to ensure a sustainable future for the media business, while removing its losses from SPH,” said SPH chief executive Ng Yat Chung. “The next step was a thorough process to unlock and maximise value for all shareholders for the remaining company.”
Keppel and SPH previously worked together on the M1 and Genting Lane data centre joint ventures, which will come under Keppel’s ownership upon completion of the acquisition. The two firms are also shareholders in the manager of SGX-listed Prime US REIT.