Keppel Corp to offer 26% premium for Keppel Land shares

SINGAPORE — Keppel Corp, the world’s biggest builder of offshore oil rigs, has offered to buy out shareholders in Keppel Land, Singapore’s third-biggest developer by value, aiming to take the company private.

The rig builder will offer S$4.38 to S$4.60 a share for Keppel Land stock, the company said in a statement to the Singapore stock exchange today (Jan 23). That’s a premium of 26 per cent over the real estate developer’s last trading price of S$3.65 on Tuesday in Singapore. Shares of both companies were halted from trading from Jan 21. The rig maker already owns 54.6 per cent of the real estate company.

Keppel restructured its assets in telecommunications and infrastructure businesses last year through mergers and pulling them into trusts. CitySpring Infrastructure Trust, a Singapore piped-gas supplier backed by Temasek Holdings, and Keppel Infrastructure Trust said in November they will merge to form Singapore’s biggest infrastructure-focused business trust.

The plunge in crude prices last year to five-year lows have increased concerns that demand for drilling rigs and floating production facilities may weaken. As projects from the Arctic Ocean to the Middle East come under scrutiny, spending in the oil industry may fall 20 per cent this year, according to analysts at Sanford C. Bernstein.

OFFSHORE, MARINE

The offshore and marine operations made up for 64 per cent of Keppel Corp’s revenue last year, while property contributed 13 per cent, according to Keppel Corp’s annual earnings. Net income from the offshore operations accounted for 55 per cent of the total in that period with property at 26 per cent.

Keppel Corp has yards around the world to make rigs and repair ships — from Singapore to Indonesia, China, Brazil and Azerbaijan. The company won S$5.5 billion of new orders last year. Its orderbook was S$12.5 billion at the end of last year, lower than S$14.2 billion at the end of 2013.

Keppel Land’s core markets of Singapore and China made up 89.3 per cent of sales at the end of last year, while it is expanding into growth markets such as Indonesia and Vietnam, according to the company.

In July, the developer made its maiden investment in the US with a prime residential project in New York City.

The company is also a key office developer in Singapore with buildings including the Marina Bay Financial Centre, the Ocean Financial Centre and One Raffles Quay in the island’s central business district. BLOOMBERG