Lian Beng Group has joined the procession of Singapore-listed developers in line to be taken private by their controlling shareholders, with the Ong family on Tuesday announcing a voluntary unconditional cash offer of S$0.62 per share for the builder.
The offer price represents an 8.8 percent premium to Lian Beng’s last traded price and an 18.8 percent markup to the shares’ 12-month volume weighted average price, according to an SGX filing on behalf of the family’s investment vehicle, OSC Capital. Led by chairman and patriarch Ong Paik Ang, the Ong family collectively holds a 69.56 percent stake in the company and would need to garner acceptances exceeding 90 percent of the issued shares to gain the option to compulsorily acquire the remainder.
The proposed deal values Lian Beng at S$309.8 million ($232.6 million) and follows a recent spate of attempted and completed delistings of property firms including SingHaiyi Group, Chip Eng Seng, Global Dragon and Boustead Projects. After a Tuesday trade halt, Lian Beng shares were up nearly 15 percent in resumed action Wednesday afternoon.
“The offer presents shareholders with a clean cash exit opportunity to realise their entire investment in the shares at a premium over the historical traded prices of the shares, without incurring brokerage and other trading costs,” financial advisor UOB said in the filing.
Liquidity Dries Up
The Ongs made note of the “generally low” trade volume in Lian Beng after the family’s buy-up of shares triggered a mandatory general offer in 2021. Average daily trading volume during the last one, three, six and 12 months never reached 0.04 percent of the total number of issued shares.
The family’s view is that Lian Beng is unlikely to require access to Singapore equity capital markets in the foreseeable future and could tap other funding sources such as bank borrowings, therefore removing the need for an SGX listing, according to the filing.
In the minus column, the offer price of S$0.62 constitutes a steep discount to the developer’s most recently disclosed net asset value of nearly S$1.54 per share. A similar issue is throwing doubt on Boustead Singapore’s attempted takeover of Boustead Projects.
Arun George, an analyst at Global Equity Research in London, said the Ongs would likely heed the Boustead Projects playbook of following their opening offer with a nominal increase, with Boustead Singapore described as having tabled a “derisory 5.6 percent bump to its low-balled offer” after shareholders baulked at the opening bid.
“The offer price is unattractive in comparison to peer multiples and precedent transactions,” George said. “The price is not final. As the family aims to privatise LBG, a bump is likely.”
The potential buyout has implications for SGX-listed SLB Development, a property firm led by Ong Pang Aik’s son Matthew and 77.6 percent owned by Lian Beng.
In a Tuesday SGX filing, SLB said the cash offer relates strictly to shares of Lian Beng and is extended solely to the shareholders of the group. It referred all inquiries to the announcement by OSC Capital.
Mingtiandi reported in February that SLB had bought a pair of low-rise office buildings between the city-state’s Boat Quay and Clarke Quay areas with plans to renovate or redevelop the ageing assets near the Singapore River.
SLB acquired the adjoining five-storey office blocks at 38 and 40 South Bridge Road for S$13.58 million, according to a social media post by Savills Singapore, which brokered the deal.