Toppan is offering S$1.76 a share for all SNPÆs equity shares outstanding translating to an equity value of S$208 million. The bid is subject only to Toppan reaching a simple 50% majority and Toppan has already cornered 53.55% of SNPÆs shares through an agreement with SNPÆs controlling shareholder Green Dot Capital. Green Dot Capital is a 100% subsidiary of Temasek Holdings, SingaporeÆs investment holding company.
The offer price is a premium of 8% over SNPÆs last traded price on the Singapore Exchange (SGX) on June 9 and a 25% premium to the volume weighted average price of SNP for the six months up to June 9.
On April 18, SNP advised the SGX that Green Dot Capital was evaluating options with respect to its stake in SNP. The announcement coincided with SNPÆs first quarter results which saw net profit drop to S$770,000, a 67% decline compared to the same quarter of the previous year. Singapore-headquartered brokerage house Phillip Securities Research attributed the drop in net profit to higher raw material prices causing a squeeze on margins and a slowdown in SNPÆs export business to the US. After three consecutive buy recommendations since it initiated coverage on SNP in November 2007, Phillip downgraded the stock to a hold following the results announcement in April.
Toppan is being advised by PricewaterhouseCoopers corporate finance. In a written statement on its website it mentioned that the takeover is being performed with the cooperation of the Development Bank of Japan.
SNP was created in 1973 to take over the role of the government printer in Singapore. It has grown to span commercial printing of books, magazines and printing products to high-end security, financial and specialty printing. It now has a regional network with eight principal subsidiaries: two in Singapore, five in Greater China and one in Thailand.
Toppan has divisions spanning printing and other related areas, including securities and cards, commercial printing, publications printing, packaging, industrial materials, electronics and optronics. It is a global company with 29 subsidiaries in Asia, Europe, Australia and the US.
Toppan says the acquisition is intended to enhance its global presence, especially in Greater China where Toppan forecasts the printing market will grow to $66 billion in 2011. Toppan also mentioned SNPÆs capabilities to manufacture high-quality products for books for Europe, the US and Australia, as a driver of value for SNP.
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