Mixed results for delistings in Singapore

Templeton questions MBKÆs offer to buy out minority shareholders in AsiaPharm, while TecityÆs plan to delist Straits Trading gets a fillip as the competing bidder withdraws.
Delisting hopefuls in Singapore have achieved mixed results this week with MBK hitting a hurdle in its $252 million plan to delist AsiaPharm, and Tecity moving a step forward in its $1.5 billion bid for Straits Trading.

The bid by private equity firm MBK Partners for AsiaPharm was in focus yesterday when Templeton Asset Management president Mark Mobius said the fund was ônot convinced by the offerö. Mobius says the offer price ôseverely undervalues AsiaPharm and is highly disadvantageous to minority shareholdersö. He also claims that full disclosure about the agreement between MBK and AsiaPharm's directors has not been provided to minority shareholders.

Templeton was responding to a tender offer announced by MBK on February 6 to buy 100% of AsiaPharm for S$357.4 million ($252 million). MBK is acting in concert with members of AsiaPharm's management team. The per share price of S$0.725 which MBK has offered is around a 30% premium to the one-, three- and six-month volume weighted average price at which AsiaPharm has traded. Analysts comment that the equity value at which the transaction has been launched represents an earnings multiple of 20 times and a revenue multiple of 3.7 times, higher than what comparables trade.

ôIt is completely normal for some documents to be withheld in such situations as they contain information which is commercially sensitive and could be of value to competitors,ö explains a specialist, with respect to TempletonÆs statements regarding disclosure.

Sources have also expressed surprise that such accusations are being leveled at a Singapore-listed company, because the Singapore Exchange is known to take its responsibility to protect minority shareholder rights very seriously.

Other large institutional shareholders in AsiaPharm include: local fund See Hoy Chan Equities which has a 7% in the business; and Martin Currie with a 6% stake.

AsiaPharm is a China-based specialty pharmaceutical group engaged in the production and sale of drugs and formulations for orthopedics, neurology, gastroenterology and hepatology. It also provides contract research services.

Analysts covering the company are unequivocal in their conviction that the offer fully values AsiaPharm and that shareholders should tender. As has become the norm in these situations, hedge funds are now in play, pushing AsiaPharm's stock price up to S$0.70 on February 6 where it has stayed ever since.

AsiaPharm closed up 0.7% at S$0.71 yesterday, suggesting that investors believe the offer will still progress and that Templeton will not find much support.

MBK is being represented by ABN AMRO and the board of directors of AsiaPharm is taking advice from Kim Eng Capital.

In other delisting news, Oversea-Chinese Banking Corp has agreed to accept TecityÆs improved offer of S$6.70 per share for Straits Trading. Yesterday OCBC withdrew its competing offer of S$6.55 per share for the target. OCBC attributed the withdrawal to the increase in shareholder value which TecityÆs latest offer represents and ôcurrent volatile market conditionsö.

At the improved price Tecity is placing an equity value of S$2.18 billion ($1.56 billion) on Straits Trading. OCBC is one of the largest shareholders in Straits Trading and played its cards well for both itself and minority shareholders by tabling a competing bid for the business. This forced Tecity to increase its offer by S$1 per share or 17.5% from the original price of S$5.70 per share originally offered to shareholders on January 6.

TecityÆs initial offer sparked off a bidding war as OCBC put a price of S$5.76 per share, just six cents higher then TecityÆs offer, a few days later. Tecity responded with an offer of S$6.50 which OCBC trumped on February 15 offering a price of S$6.55 per share. And, now, at S$6.70 OCBC has thrown in the towel.

Straits Trading is an investment holding company with subsidiaries engaged in mining, smelting, property and financial investments. CIMB-GK Securities is providing the board of Straits Trading advice regarding the Tecity offer.

According to the offer document filed by OCBC and its adviser Credit Suisse on February 12, OCBC and parties acting in concert own 26% of Straits Trading.

Tecity currently owns 23.64% of Straits Trading. Much of TecityÆs shareholding is through group subsidiaries which have been shareholders in the business since the 1950s. Standard Chartered Bank is advising Tecity.

Straits Trading last traded at TecityÆs offer price of S$6.70. Now it only remains to be seen if minority shareholders in Straits Trading follow OCBC's lead and tender their shares.
¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media