Great Eastern Holding

https://www.channelnewsasia.com/singapor...te-4325816

Delist offer. Nice

But offer price looks ridiculously low compared to embedded value. Feels to me like a lowball offer

So, OCBC last offered 16sgd for the remaining 17% of shares 18 years ago and got ~5%, leaving about 12.1% public float. 6 months ago, there was a 0.5% bloc sale reducing public float to 11.6%, or 1.6% from trading suspension. Depending on IFA's opinion and recent BSL-BP case study, is there a merger arbitrage opportunity?

On reflection, minorities have been "making waves" recently in SGX (BWI and now GE). Nah, these has to be coincidences because the Offerer has mentioned that it is a "natural progression".

OCBC MAKES S$1.4 BILLION OFFER FOR GREAT EASTERN

The Offer price of S$25.60 represents a 36.9% premium over Great Eastern’s last traded price of S$18.70 and premiums of 38.6%, 40.0% and 42.4% over the one-month, three-month and 12-month periods up to and including the last trading date of 9 May 2024.

OCBC Group Chief Executive Officer Ms Helen Wong said: “The Offer is a natural progression of OCBC’s strategy. We have moved intentionally to build up a strong wealth management franchise by hiring the best people and instituting best practices and processes, and raising our investment in Great Eastern. We have been looking at opportunities to best use our capital and believe the Offer allows us to deploy our resources into a key business that is expected to be earnings accretive to OCBC.”

Ms Wong added: “This is not the first time that we are making an offer to increase our investment in Great Eastern – first in 2004, followed by 2006.

https://links.sgx.com/FileOpen/Media%20R...eID=802887

(14-03-2024, 11:16 AM)weijian Wrote: BT Ben Paul invited our OPMI hero Mr Ong for an interview and he revealed more details about OCBC's rejection. In essence, as per Mr Ong - (1) OCBC didn't answer his request when he asked them "is anything missing?" during the submission of his request. (2) When they rejected him, they told him to seek his own legal advice.

In the meanwhile, Ben Paul also flagged out the below statement in the official statement lodged with SGX which I missed out (as I thought it was the typical boilerplate response at the end of every release)

In the meantime, shareholders are advised to exercise caution when trading in GEH shares as there is no certainty that requests made to the Company through the media before the Company has been able to first review the requests and provide a formal response, will materialise.

With these, we can try to connect the dots - On hindsight, OPMIs made the wrong move to publicize their actions earlier than they should have done. But on the other hand, one cannot really blame them for "the rush" because after all, Mr Ong has revealed that they had been engaging them since 2020.

BT Mark to Market: Behind the minority-investor movement at Great Eastern (Ep 41)

https://www.businesstimes.com.sg/podcast...tern-ep-41

After our OPMI hero Mr Ong, the latest BT Mark to Market podcast invited another OPMI hero, SGX RegCo czar Tan Boon Gin.

Our RegCo czar has stated 1 key barrier for OPMIs to table resolutions during AGM, even though they meet the requirements  - They have to send the resolutions to ALL shareholders but PDPA stops them from doing so. So without the co-operation of the company, it is impossible to do so. That could be what SIAS is referring as "overly legalistic" as to GEH's treatment on Mr Ong?

In time to come, companies will be complied to help OPMIs make more noise against themselves. There will probably be more delisting to come, as what we have recently witnessed.

S1E43: BT Mark to Market: SGX RegCo focuses on shareholder value (Ep 43)

https://podcasts.google.com/feed/aHR0cHM...2FzdC5yc3M=

https://www.change.org/p/upholding-fairn...eral-offer

I am a longstanding shareholder of Great Eastern Holdings (GEH) and also a supporter in the minority investor group led by Mr Ong Chin Woo.

I feel compelled to address the recent unconditional offer made by OCBC, the majority shareholder holding 88.4% of GEH, at $25.60 per share for the remaining stake it does not own.

It is disheartening to note that this offer stands at a considerable discount from GEH's embedded value (EV) of $36.59 as of December 31, 2023. Such a significant deviation raises concerns among shareholders, particularly considering OCBC's established reputation for fairness and its integral role in Singapore's financial sector.

Reflecting on history, OCBC's previous offers in 2004 and 2006, standing at 1.3x and 1.5x EV respectively, showcased a commitment to equitable valuations. Therefore, the current offer of 0.7x EV appears perplexing and inconsistent with past practices.

------

An action taken by a longstanding shareholder to push for a higher offer price. If you support his stance, you can 'sign' the petition on the right of the webpage

https://www.change.org/p/upholding-fairn...eral-offer

Perhaps shareholders might want to consider reading up Boustead Projects as a case study ...

---------------

OCBC's final offer of $25.60 for GEH is 'not fair but reasonable' says EY; advises shareholders to accept
https://www.theedgesingapore.com/news/ma...ers-accept

SIAS - Dialogue with OCBC for Great Eastern Holdings Shareholders
https://portal.sias.org.sg/Event/EventDe...areholders

Circular
https://links.sgx.com/FileOpen/GEH%20Off...eID=806734

As at end 13 June 2024, OCBC has received acceptances for 1,743,475 Great Eastern shares or 0.37% of the total number of Great Eastern shares from Great Eastern shareholders. This raises OCBC’s stake in Great Eastern to 88.80%, and to 89.01% if the number of shares held by OCBC’s concert parties is included, OCBC adds.

To quote The Edge article as above, GEH will get suspended if OCBC manages to receive another 0.99% of shares for acceptances. Arbitragers had pushed the share price above the offer price immediately after trading resumed and so OCBC couldn't mopped up shares on the open market. Now that there is no increase in offer price, would the share price collapse reach the offer price level to allow OCBC to mop up shares?

From BP's experience, IF free float drops <10%, OCBC has to EITHER restore free float, OR make a delist-able offer. From the offer document, OCBC has already stated its intention to seek a delisting and will not support any actions to maintain listing (ie. restore free float). So the next milestone is whether it will cross the <10% free float requirement before it gets suspended and the inevitable "fair and reasonable" offer comes again 6 months after the current one closes.

Unlike BP shares that were given "FOC" (a sort of mental bias) as dividend in specie and hence easier to accept, GEH shareholders may probably hold out. But in order to get a (potential) better offer, OCBC has to get another 0.99% either as acceptances or open market purchase. Maybe all minorities can "gang together" via accepting a portion of their shares to force suspension (free float<10%) and then have the inevitable future offer at 0.8x EV , which is another 10-12% higher for the remaining shares.

Hi weijian,

I don't think there is a need for minorities to "gang together" to force suspension in order to to get a potential better offer. I mean, with things as they were, I am quite sure that even if GEH is not suspended, there will be another offer down the road in the future. Even if there is not, the recent change in dividend policy had already made GEH shares more attractive in terms of higher dividend payout. The holding cost of hanging on is not high, since it had been compensated by a higher dividend payout.

(15-06-2024, 01:37 PM)ghchua Wrote: Hi weijian,

I don't think there is a need for minorities to "gang together" to force suspension in order to to get a potential better offer. I mean, with things as they were, I am quite sure that even if GEH is not suspended, there will be another offer down the road in the future. Even if there is not, the recent change in dividend policy had already made GEH shares more attractive in terms of higher dividend payout. The holding cost of hanging on is not high, since it had been compensated by a higher dividend payout.

Hi ghchua,

i am unfamiliar with the delisting offers and its many sgx rules. If ocbc crosses the 90% threshold, isnt there the possibility of compulsory acquisition, will remaining shareholders be forced to sell at $25.60 as well? Does it work this way?

(15-06-2024, 02:13 PM)safetyfirst Wrote: Hi ghchua,

i am unfamiliar with the delisting offers and its many sgx rules. If ocbc crosses the 90% threshold, isnt there the possibility of compulsory acquisition, will remaining shareholders be forced to sell at $25.60 as well? Does it work this way?

Hi safetyfirst,

Compulsory acquisition will only occur when OCBC gets 90% of the shares that they do not own when they first made the offer. Which means, they will have to get 90% of the remaining 11%+ of minorities. Quite a tall order, considering that the offer is now deemed as "not fair". Also, they have extended the deadline for acceptance for the final time, which means no more extension.