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21-05-2014, 07:35 AM
$4-a-share buyout offer for HPL 'fair and reasonable'
Independent adviser CIMB: Premium higher or in line with other takeovers
Published on May 21, 2014 1:32 AM
Mr Ong and Wheelock raised their offer from $3.50 a share to $4 a share last Wednesday, valuing the hotel firm at $2.07 billion. -- BT FILE PHOTO
By Cheryl Ong
A BUYOUT offer for Hotel Properties (HPL) at $4 a share has been deemed "fair and reasonable" by independent financial adviser CIMB Bank.
The adviser to HPL's independent directors compared the premium of the offer price over previously transacted prices with those for earlier takeovers for 35 companies.
It found that the premium was either higher than, or in line with, these earlier transactions.
HPL's valuation ratios were also higher than those of preceding transactions by seven of its peers in the property market, such as SC Global Developments and Singapore Land, said CIMB in a circular sent to shareholders Monday.
The findings said the offer lodged by 68 Holdings, the consortium led by HPL's managing director Ong Beng Seng and Wheelock Properties, "does not change the management control of the company". This means that the bid will not result in any change in control of the firm.
Mr Ong and Wheelock raised their offer to buy out the hotel firm from $3.50 a share to $4 a share last Wednesday, valuing the hotel firm at $2.07 billion.
They started the takeover exercise last month after they bought about 41.91 per cent of HPL's shares for $3.50, triggering a "mandatory conditional takeover" for all the other shares they do not own in the firm at the same price.
HPL's independent directors concurred with CIMB's advice, noting that some investors could consider selling shares on the open market, or accept the $4 offer.
These include shareholders who could be uncertain over HPL's prospects following the deal, or those who wish to realise their investments now.
Shareholders who are otherwise confident of the firm's prospects under 68 Holdings' control may consider retaining their shares, the independent directors said, but added that its shares have not traded at, or above, $4 in the three-year period before the buyout campaign started last month.
CIMB also pointed out that the average daily trading volume of the hotel firm "has generally declined in recent years".
It fell from a three-year average daily trading volume of 229,526 shares (or 0.17 per cent of HPL's free float) to about 97,429 (0.07 per cent) over the one-month period before the takeover bid.
The higher offer price is at a 4.17 per cent premium over HPL's last traded price of $3.84 last Wednesday, ahead of the price revision. It also represents a 20.3 per cent discount to the firm's revalued net asset value per share of $5.02 as at March 31, based on valuations obtained from firms such as CBRE, Jones Lang LaSalle and Cushman and Wakefield.
Ahead of its raised offer, investors holding 692,000 - or 0.13 per cent - of HPL's issued shares had accepted the first offer of $3.50.
HPL shareholders who tender their shares will not have last year's full-year dividend of eight cents deducted from the $4 offer price, 68 Holdings said earlier.
HPL shares closed one cent higher at $4.04 yesterday.
ocheryl@sph.com.sg
Independent adviser CIMB: Premium higher or in line with other takeovers
Published on May 21, 2014 1:32 AM
Mr Ong and Wheelock raised their offer from $3.50 a share to $4 a share last Wednesday, valuing the hotel firm at $2.07 billion. -- BT FILE PHOTO
By Cheryl Ong
A BUYOUT offer for Hotel Properties (HPL) at $4 a share has been deemed "fair and reasonable" by independent financial adviser CIMB Bank.
The adviser to HPL's independent directors compared the premium of the offer price over previously transacted prices with those for earlier takeovers for 35 companies.
It found that the premium was either higher than, or in line with, these earlier transactions.
HPL's valuation ratios were also higher than those of preceding transactions by seven of its peers in the property market, such as SC Global Developments and Singapore Land, said CIMB in a circular sent to shareholders Monday.
The findings said the offer lodged by 68 Holdings, the consortium led by HPL's managing director Ong Beng Seng and Wheelock Properties, "does not change the management control of the company". This means that the bid will not result in any change in control of the firm.
Mr Ong and Wheelock raised their offer to buy out the hotel firm from $3.50 a share to $4 a share last Wednesday, valuing the hotel firm at $2.07 billion.
They started the takeover exercise last month after they bought about 41.91 per cent of HPL's shares for $3.50, triggering a "mandatory conditional takeover" for all the other shares they do not own in the firm at the same price.
HPL's independent directors concurred with CIMB's advice, noting that some investors could consider selling shares on the open market, or accept the $4 offer.
These include shareholders who could be uncertain over HPL's prospects following the deal, or those who wish to realise their investments now.
Shareholders who are otherwise confident of the firm's prospects under 68 Holdings' control may consider retaining their shares, the independent directors said, but added that its shares have not traded at, or above, $4 in the three-year period before the buyout campaign started last month.
CIMB also pointed out that the average daily trading volume of the hotel firm "has generally declined in recent years".
It fell from a three-year average daily trading volume of 229,526 shares (or 0.17 per cent of HPL's free float) to about 97,429 (0.07 per cent) over the one-month period before the takeover bid.
The higher offer price is at a 4.17 per cent premium over HPL's last traded price of $3.84 last Wednesday, ahead of the price revision. It also represents a 20.3 per cent discount to the firm's revalued net asset value per share of $5.02 as at March 31, based on valuations obtained from firms such as CBRE, Jones Lang LaSalle and Cushman and Wakefield.
Ahead of its raised offer, investors holding 692,000 - or 0.13 per cent - of HPL's issued shares had accepted the first offer of $3.50.
HPL shareholders who tender their shares will not have last year's full-year dividend of eight cents deducted from the $4 offer price, 68 Holdings said earlier.
HPL shares closed one cent higher at $4.04 yesterday.
ocheryl@sph.com.sg
