Lucien Wong on Singapore's new takeover code

Top Singaporean lawyer, Lucien Wong of Linklaters Allen & Gledhill explains changes to the takeover code.

Last year was obviously a very big year for M&A in Singapore, and you were at the heart of all the transactions. Do you think this year is going to be as active as last?

I don't believe so. If you look at the activity last year, it was centred on bank consolidation in Singapore and I don't think a second round of consolidation is going to happen this year. Secondly, a lot of the M&A last year was centred on foreign buyers acquiring our contract manufacturing companies. So a lot of these have already been sold.

Are there particular sectors you think may still be active?

Banks will have to look at divesting some of their non-core assets, and there may also be some activity with major shareholders taking their companies private. There have been some recent examples of this.

Can we talk about the takeover code. Is it about to change in Singapore?

We have a brand new code that came into effect on January 1 this year. The last one dated from the 1980s, and now I believe we have a code that brings Singapore up to date and in line with London.

What have been the most significant changes to the code?

The threshold level has been raised from 25% to 30%, and the creep limit has been changed from 3% in any 12 months, to 1% in six months. The takeover timetable has also been changed, for instance the offer period has been extended from 21 to 28 days. Those are the major changes.

What is the creep period?

If you buy 30% of a company you have to make a bid. But if you already own between 30% and 50%, and you buy more than 1% in six months, you then have to make a general offer.

Is this the same in London?

As far as I am aware, London has abolished the creep limit.

I suppose in Singapore there must be a lot of shareholders that own between 30-50%. What if they were doing a share buyback?

There are rules governing this.

In Hong Kong, if you have 20%-owned associates, and you make a general offer, you then have to get declarations from all of those associates as to whether they hold stock in the target. Is that the case in Singapore?


Surely that can be awkward, because the government owns a web of companies and holds more than 20% of each. In theory does this mean 30 or so declarations have to be collected, when one government owned company makes a bid?

Temasek is aware of this, and thus keeps pretty good records of what its companies own.

You would have been consulted on changes to the takeover code. Is it what you hoped for?

The major changes we supported have been taken in.

Does Singapore have squeeze outs?

Yes. They are the same as London and kick-in when 90% is reached.

Do you think the hostile nature of the DBS bid for OUB has proven that it is not possible to do hostile takeovers in Singapore?

No. If you look at OCBC's bid for Keppel Capital,it could have been considered hostile initially. I feel mindsets have changed in Singapore. However, a lot of listed companies in Singapore are majority controlled, and you can't launch hostile bids unless you have cooperation with the major shareholder. But where you have Singapore-listed companies with no dominant shareholder, there is no reason why hostile bids cannot be launched.

But they would be the minority?

Yes, they would be. But there are still some significant companies where there is no single or dominant group of shareholders.

How many in your M&A team?

We have at least four partners devoted to public M&A.

Do you think Singapore companies will continue to buy assets outside Singapore? Or have they been put off by negative press about overpaying?

I think they will continue to buy. Your growth in Singapore is always going to be restricted, and so if you're looking for growth, naturally you will look outside.

Share our publication on social media
Share our publication on social media