In a $3.4 billion deal, Singapore Press Holdings (SPH) will be delisted following a takeover by Keppel Pegasus, a wholly owned subsidiary of industrial conglomerate Keppel. The media business will be spun off as part of the deal.
The pact follows a strategic review and restructuring process undertaken by SPH to try to sandbag a business that has struggled for business recently and seen its fortunes deeply impacted by the pandemic. This deal is based on a recent restructuring plan announced by SPH.
The first step in the review was the proposed restructuring of SPH’s media business. On May 6, SPH announced that it would transfer subsidiaries, employees, its news centre and its print centre, along with their respective leaseholds, as well as all related intellectual property and information technology assets to a wholly owned subsidiary, SPH Media.
This transfer is subject to assent from SPH shareholders at an extraordinary general meeting (EGM) expected to be held within the mext two months. If approved, the process will be sealed by the end of the year, and SPH's privatisation by Keppel is likely to be concluded soon after.
Under the restructuring process, SPH Media would be transferred to a public company limited by guarantee (“CLG”) for a nominal sum. Following this, SPH would no longer be subject to any funding requirements related to the media business. In addition, restrictions under the Newspaper and Printing Presses Act, including a 5% shareholder cap restriction and issue of management shares, would be lifted.
The firm's board carried out a comprehensive review of its options and opted for a deal with Keppel because it reckoned "that the privatisation of the entire company would be the preferred solution", according to a release. "It derives a better valuation outcome for all shareholders where a control premium is paid for the entire 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."
Ng Yat Chung, chief executive officer of SPH, said: “We took the first step with the media restructuring to ensure a sustainable future for the media business, while removing its losses from SPH."
A two-stage process was conducted to solicit bids and process was overseen by a steering committee consisting of board members, in consultation with Credit Suisse and Allen & Gledhill, SPH’s financial and legal advisors, respectively.
As part of the arrangement, the company announced that SPH shareholders will receive consideration of S$2.099 per share, comprising cash of S$0.668 per share, 0.596 Keppel REIT units valued at S$0.715 per share, and 0.782 SPH REIT units valued at S$0.716 per share, from a distribution in-specie (“DIS”) by SPH.
This represents a 39.9% premium to the last traded price of S$1.500 per share before the strategic review of SPH’s businesses was announced on 30 March, as well as an 11.6% premium to the last traded price of S$1.880 per share on 30 July 2021 and a 21.4% premium to the three-month volume weighted average price of S$1.729 per share. Keppel Pegasus will hold 20% in SPH Reit and Keppel Reit as part of the transaction. SPH and Keppel and its subsidiaries halted trading on Monday as part of this deal.