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Raises cash offer price for SPH

  • Keppel made Final Offer of S$2.351 for SPH with S$0.20/share higher in cash consideration
  • More compelling offer by Keppel; SPH to call for scheme meeting
  • Still financially attractive for Keppel.
  • Reiterate BU; TP S$6.20

Final offer of S$2.351 for SPH. In response to the counter bid for SPH, Keppel has made a Final and Irrevocable offer for Singapore Press Holdings ex-media (“SPH”), raising its offer price by 20 Sct cash /share. This will lift its offer price from S$2.099 to S$2.351, as the cumulative value of SPH REIT and Keppel REIT units offered has also increased by S$0.052/share with improving market conditions. The revision is expected to increase Keppel’s cash outlay by ~S$320m to S$1.39bn and net gearing marginally by 0.03x.

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More compelling offer by Keppel.Keppel emphasizes the attractiveness of its offer:
1.        Higher offer price of S$2.351 (34% or 86.8sct cash) vs Cuscaden’s S$2.10 (all cash)
2.        Partial consideration in REITs – SPH REIT and Keppel REIT units allow shareholders to participate in the growth of the REITs as well as enjoy recurring income
3.        Highest transaction certainty as all regulatory approvals have been obtained
4.        Shortest transaction timeline with consideration payable to SPH shareholders by mid-Jan 2022

SPH to call for scheme meeting. SPH acknowledges that Keppel’s final offer is superior to the competing offer from Cuscaden Peak and will undertake to call for the SPH scheme meeting.

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Still financially attractive for Keppel. The proposed acquisition is strategic and remains financially attractive to Keppel despite the higher consideration. Based on our last estimated RNAV for SPH @$2.49/share.the accretion to Keppel could decline from S$0.34/Keppel share to S$0.12/Keppel share after price revision. Keppel is well-positioned to unlock value of SPH assets given the existing partnership and the sizeable and visible assets on SPH’s books which are ripe for securitisation.  There could also be other synergies that might be created and yet to be captured in the current RNAV. 

Maintain BUY and S$6.20 TP on Keppel. More to update post analyst briefing in the morning.

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