SINGAPORE — Singapore conglomerate Keppel Corp announced on Monday (Aug 2) that it has offered to acquire and privatise Singapore Press Holdings (SPH), excluding the company’s media business, for S$2.2 billion.

The deal is valued at S$3.4 billion in total, as it will include S$1.2 billion worth of SPH’s stake in SPH Reit which will be distributed to its shareholders. 

SPH said in a statement that the deal depends on the successful completion of the media restructuring exercise announced earlier this year, and will see the company eventually delisted.

Should the offer go through, SPH will become a wholly owned subsidiary of Keppel. SPH’s stake in SPH Reit will also be reduced from 65 per cent to 20 per cent. 

SPH will appoint an independent financial adviser who will make the financial recommendation to shareholders on the scheme.

Under the proposal, SPH shareholders will receive cash of 66.8 cents a share, 0.596 Keppel Reit units valued at 71.5 cents a share and 0.782 SPH Reit units valued at 71.6 cents a share, for a total value of S$2.099 per SPH share.

This represents a 39.9 per cent premium to the last traded price of S$1.50 per SPH share before the strategic review of the company’s businesses was announced on March 30 this year, said SPH.

It also represents an 11.6 per cent premium to SPH’s last traded price of S$1.88 per share on July 30, the last trading day before this announcement, and a 21.4 per cent premium to SPH’s three-month volume-weighted average price of S$1.729 per share.

The proposed deal with Keppel is expected to be completed by the end of this year, and is subject to approval from Keppel and SPH’s shareholders at their respective extraordinary general meetings in the coming months.

It is also subject to regulatory approvals and the sanction of the deal by the High Court, among others.

SPH said in its statement that its board of directors had decided that privatising the entire company would be “the preferred solution”, as it would maximise value and minimise disruption for shareholders.

“It derives a better valuation outcome for all shareholders, where a control premium is paid for the entire company,” said the media company. “Also, it avoids a situation where prime SPH assets are cherry-picked, leaving SPH with its existing debt and the risk of being unable to monetise its remaining assets.”

In May, SPH had announced that it would transfer its media assets to a wholly owned subsidiary, SPH Media Holdings, which itself would be transferred to a public company limited by guarantee. Following this restructuring, SPH would no longer be subject to any funding requirements related to the media business.

SPH said a thorough and orderly two-stage process was conducted to solicit and evaluate proposals for its remaining non-media business from “a number” of interested parties. 

This process was overseen by a steering committee consisting of SPH board members and done in consultation with private bank Credit Suisse, law firm Allen and Gledhill, and SPH’s financial and legal advisors. 

SPH said the final closed bid was evaluated based on price, terms and conditions, financing certainty, regulatory approvals, transaction structure and execution risk.

“At the end of the process, the final proposal from Keppel to privatise SPH was selected after careful evaluation, based on the various criteria,” it said in its statement.

During a press briefing on the proposed deal, Mr Ng Yat Chung, SPH’s chief executive officer, said Dr Lee Boon Yang, SPH’s current chairman and a former Keppel chairman, has recused himself from all discussions on the Keppel deal. 

“Members of the board steering committee overseeing the strategy review process… have oversight of the process in the shortlisting of the bids, but because of (Dr Lee’s) position as previous chairman of Keppel, he recused himself from the decision to select Keppel’s proposal,” said Mr Ng.

“He also recused himself for all discussions regarding the details of the agreement with Keppel.”

During the briefing, Mr Ng was also asked if job cuts are to be expected following the acquisition. 

In his reply, Mr Ng said there is always a possibility of job cuts during every merger and acquisition. 

But he added that Keppel would be acquiring a “good portfolio” in SPH, which still has strengths in its nursing home business, student accommodation and in the retail sector.

Mr Ng said both parties are “fully committed to integrating SPH personnel into the wider Keppel ecosystem” and that the deal would bring about “great opportunities for growth and career development” to SPH staff.