Temasek Holdings Private Limited through its subsidiary Kyanite Investment Holdings Pte Ltd has offered to buy up 30.55% of total share capital of Keppel Corp at a price of $7.35 in cash. This partial offer will make Temasek Holdings (offeror concert party group) ultimately owning 51.0% of Keppel Corp’s total share capital. There are pre-conditions set and they must be satisfied or waived on or before 21 Oct 2020. The shares will continue to be listed on the Stock Exchange of Singapore after the offer goes through.
Offer price $7.35 is at a premium of 25.86% of last traded price of Keppel Corp of $5.84 as of 18 Oct 2019 and a premium of 21.09% over the volume weighted average price for the three-month period prior to and including the last trading date.
As a shareholder, will I accept $7.35 per share? I paid $9.86 for Keppel shares. This is still 25.0% below my cost. However, $7.35 is still way better than the last traded price of $5.84. Will there be a better deal than this partial offer by Temasek Holdings? Can Keppel Corporation recover to its past glorious days?
This is the trouble when investing in shares. Shareholders are at the mercy of corporation that causes share price to decline by the operations of the business in an unfavourable business climate. If one were to hold onto the shares for the long-term (and not selling earlier), he sees a permanent decline in the share price with no hope of recovery in the near term. Then one day, some company with deep pocket comes along and offers to buy up the shares when they were beaten down. On the other hand, this acquirer is doing existing shareholders a favour. How else can the shareholders get a better price? This is the risk of investing in shares.
Now the big question: to hold or to accept the Temasek Holdings’ partial offer of purchase at $7.35? More news to come after this initial announcement of partial offer by Temasek Holdings and its subsidiary.
Copyright © 2019, limkimtong for Living Investment
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