End of bidding war for Straits Trading is good news for minority investors
A bidding war between two of Singapore’s most famous corporate families has come to an end, but not without a final climax.
Insurer Great Eastern Holdings says it will sell its shares in Straits Trading to Tecity, which is controlled by the family of the late Tan Chin Tuan.
On Sunday, the Lee family, the main shareholder of Oversea-Chinese Banking Corp, pulled out of the race for Straits Trading, saying it would accept the S$6.70 per share offer from Tecity.
Analysts say minority investors should seriously consider cashing out at this price too.
The corporate drama that had investors glued to mainboard-listed Straits Trading’s share price has drawn to a close.
Citing market volatility, the Lee family chose not to make a counter-bid and instead took up the Tans’ offer of S$6.70 a share.
But pushing this unfolding spectacle into a new peak is Great Eastern, whose move to sell its shares in Straits Trading tipped the scales over to Tecity’s way.
The Tan family owns about 26 percent of Straits Trading. The decision by the Lee Family and Great Eastern will give it an additional stake of about 27 percent. And that would give the Tan family control of Straits Trading, allowing them to unlock whatever potential it sees by playing an active role in the board.
It has, however, made clear in its offer document that the component of the management team will be untouched.
All eyes are now on another key shareholder, OCBC. At its latest results briefing, OCBC said it was considering the Tecity offer.
Shares in Straits Trading have been gaining, thanks to the bidding war.
Mu Quek Siong, Head, POEMS Dealing Team, Phillip Securities, said: “For minority shareholders, yes it’s good news. Because if you look at Straits Trading prices from 1989 until now, this is quite far away from their prices.
“All the way from 1989 to 2006, 2005 they have been trading at below S$3.50 level. These two years we have seen exponential gains at S$6.70. This is a good chance for minority shareholders to exit at this price. The next thing we might want to ask the management is how you unlock the share value of this company.”
The offer from the Lee family values the commodities and property firm at S$2.18 billion. On Monday, Straits Trading’s shares closed unchanged at S$6.70.
In a statement released to the SGX late on Monday, Tecity said it has as at 5pm on March 3 garnered control of a 41.11 percent stake in Straits Trading.
This takes it past the 30 percent threshold at which the offer becomes mandatory. The offer is still conditional on getting a 50 percent control.
Source : ChannelNewsAsia - 3 Mar 2008
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