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The family of the late Tan Chin Tuan came out tops after an intense corporate tussle that started in January ended yesterday when the last of the remaining large shareholders of Straits Trading Co agreed to sell its stake.

In line with market expectations, OCBC Bank accepted the only offer left on the table for its 6.2 per cent stake in the tin smelting and property company that is one of Singapore’s oldest firms.

OCBC has ceased to command a “control premium”, after the Lee family and Great Eastern Holdings agreed to sell their respective stakes of 7 per cent and 19.92 per cent to Tecity - the investment firm run by the Tans.

With Tecity the largest shareholder of Straits Trading, the bank said that “the 6.2 per cent shareholding held by OCBC would have lost the added value of being part of the combined stake of 33.4 per cent” as it agreed to accept Tecity’s offer of $6.70 per share.

OCBC, which had previously rejected offers from both the Lee family and Tecity, said it would receive proceeds of $135.3 million and book a gain of $127.5 million from the sale.

“It is good to see that the Lees, OCBC and GE Holdings acted independently and came to this decision to the benefit of their different stakeholders,” said Tecity’s Ms Chew Gek Khim (picture), the granddaughter of the late Dr Tan.

Source : Today - 5 Mar 2008

Oversea-Chinese Banking Corp (OCBC) says it will accept Tecity’s bid for Straits Trading.

It will sell its 6.2% stake, generating proceeds of S$135.3m. The announcement comes just days after the Lee family, which controls OCBC, pulled out of the bidding war for Tecity.

And on Monday, insurer Great Eastern Holdings also announced that it was selling its stake to Tecity.

OCBC had been quoted earlier as saying that it was considering the offer.

Explaining its decision to sell, OCBC said its 6.2% stake would have lost the added value of being part of the combined shareholding of 33.4% held by the bank and related firms.

Analysts agreed, saying that the decision is reasonable given that OCBC’s 6.2% stake is comparatively small.

Tecity said that as at 5pm on March 3, it had garnered control of a 41.11% stake in Straits Trading.

Add to that, Great Eastern’s and OCBC’s stakes, and Tecity would have control of nearly 68% of Straits Trading.

This will make the offer unconditional.

Shares in Straits Trading have been jumping since early this year, thanks to the bidding war.

The counter closed almost half a percent lower on Tuesday, at $6.67 a piece.

Source : ChannelNewsAsia - 4 Mar 2008

THE JTC Corp is not deviating from its role to provide affordable factory space, said Minister for Trade and Industry Lim Hng Kiang yesterday in response to a question on whether JTC is shifting its focus with its recent plans to divest its industrial properties into a real estate investment trust (Reit).

This concern was triggered by the recent appointment of Mapletree Investments Pte Ltd (Mapletree) to establish and manage a proposed Reit which will acquire some $1.4-1.6 billion worth of JTC’s high-rise ready-built properties .

Member of Parliament Inderjit Singh raised the concern that this move will further raise the costs of industrial space here. He questioned the role of JTC, saying the earlier spinning off of Ascendas Reit has led to an increase in prices for industrial space. A-Reit, Singapore’s second Reit, was set up by JTC unit Ascendas five years ago and has since expanded by acquiring industrial buildings.

‘If we allow market forces to determine our industrial land prices, then businesses engaged in certain strategic sectors may no longer be able to compete with companies in competing economies which may not be at our stage of development and may offer companies more attractive land costs,’ Mr Singh said. He gave the example of China, where industrial land is more attractively priced.

In response, Mr Lim said: ‘JTC’s role remains the same. You must look at JTC’s role in two key areas - land and prepared industrial estates like flatted factories.’

For the flatted factories space, JTC is a small player in the market with a market share of around 20 per cent and hence takes its pricing cue from the market.

‘It is this sector that we are divesting because we believe that industrial space in Singapore is a fairly competitive market,’ Mr Lim added. ‘So JTC need not stay in this area. JTC will concentrate on land.’

While the pricing of JTC’s industrial factory space is determined by the market, the pricing for land is benchmarked against competitive locations.

Mr Lim said the JTC is very careful ‘to make sure that we do not price ourselves out of the market.’

Source : Business Times - 4 Mar 2008

PROPERTY giant Far East Organization announced yesterday that executive director Leong Horn Kee would be leaving the company on June 30 after more than 15 years of service.

Mr Leong, who served as Member of Parliament for 32 years until he retired in 2006, said that he was venturing out to work on his own ‘projects’.

‘I’m 56 years old now and I’ve had a good run in government service, GLCs, the financial sector and the private sector. It’s time to move on and I have some private business ventures in mind. Far East is in great shape and will continue to do well.’

A Colombo Plan scholar, Mr Leong started out in the Administrative Service at the Ministry of Trade in 1977. In 1984, he joined NatSteel, where he remained until 1989. Following that, he joined investment banking group NM Rothschild & Sons (S) Ltd for four years before moving on to Far East.

He was managing director of its Orchard Parade Holdings Ltd from 1993 to 2000, and managing director and CEO of Yeo Hiap Seng from mid-1999 to 2002. In recent years, he handled many of the group’s investment ventures and oversaw its internal audit operations.

‘He has been instrumental in completing our Novena Medical Centre agreement with Tan Tock Seng Hospital, and has assisted several departments in resolving various problems encountered with external agencies,’ Far East said in a statement yesterday.

Mr Leong, who has four children, is Singapore’s Non-Resident Ambassador to Mexico. He became a member of the Securities Industry Council in January.

Source : Business Times - 4 Mar 2008

Tan family’s offer turns unconditional as its shareholding crosses 50% mark.

AFTER weeks of uncertainty, the battle for control of The Straits Trading Company is now virtually over.

Major shareholder Great Eastern Holdings said last night it would sell its 19.92 per cent stake in the commodity and property development firm to the family of the late Tan Chin Tuan, a former OCBC Bank head honcho.

The move came just a day after the rival bidder, OCBC major shareholder and founder the Lee family, withdrew its $6.55 a share bid and said it would sell its stake to the Tans.

Last night, Mr Tan’s grand-daughter, Ms Chew Gek Khim, said she was ‘very happy’ at the development which paves the way for the Tans’ offer of $6.70 a share to turn unconditional, now that it has crossed the 50 per cent mark.

Including the stakes of the Lees and Great Eastern, the Tans, who made the initial bid in January, will own more than 60 per cent of Straits Trading.

Now, the remaining shareholders must decide whether to accept the offer. Some substantial investors say they are swayed to sell since Great Eastern has accepted the bid.

The Tans have said if they get more than 50 per cent of the company, they will work with the board and management to review Straits Trading’s business. ‘I don’t think it’s beyond them to asset-strip Straits Trading. They may sell off all its Malaysian properties ,’ said Kim Eng analyst Tan Chin Poh.

When contacted, one of the remaining larger shareholders, OCBC, reiterated it was still evaluating the matter.

However, observers believe there are compelling reasons why OCBC, the parent of Great Eastern, will accept the only offer left on the table.

One is that OCBC would cease to command a ‘control premium’ from any strategic buyer, after the Lees’ decision.

Indeed, this was a key argument put forward by the bank when it rejected the earlier offers. Despite having only a 6.2 per cent stake, OCBC said when combined with those of Great Eastern and the Lees, its 33.4 per cent could command a significant control premium from any strategic buyer.

OCBC also saw the potential for the trio to ‘exercise their influence’ on the Straits Trading board to continue or accelerate plans to unlock value for all shareholders.

‘But now with the Lees and Great Eastern exiting, there will not be any control premium,’ said a source. ‘The takeover bid is now unconditional, making it difficult for OCBC to say ‘no’.’

Observers believe OCBC laid its cards on the table. The bank, with Credit Suisse, has also been helping out as financial advisers to the Lees.

A dealer noted: ‘If OCBC tells the Lee family to sell its stake to the Tans, surely it applies to itself as well.’

Still, within financial institutions, a Chinese wall is said to exist between different functions, especially where a conflict of interest may exist.

OCBC’s corporate finance unit performs the role as financial adviser, while the decision concerning the bank’s Straits Trading shares is ‘undertaken by a board sub-committee appointed by the OCBC board’, OCBC spokesman Koh Ching Ching said yesterday.

Source : Straits Times - 4 Mar 2008