4 reasons behind SC Global CEO's shocking cash offer

Cash offer is for $1.80 per share.

According to PhillipCapital, Chairman and CEO of SC Global Mr. Simon Cheong made a voluntary unconditional cash offer for all the issued ordinary share capital of SC Global (SCGD) for $1.80 per share, valuing SCGD at approximately $745mn.

Here's more from PhillipCapital:

The offer price represents a discount of 37% to its estimated RNAV of $2.87, but a premium of 15.4% to its NAV of $1.56 as at 3Q12, 49.4% over the last traded price of $1.205 prior to the announcement and 39.5% over the highest closing price of $1.29 over the past 12 months.

Simon already owns 55.06% stake in SCGD and is seeking to de-list and privatize SCGD for the following reasons:

low liquidity of shares,
the company has not accessed the capital market for funds for at least the last six year,
the privatization will allow greater flexibility to manage the company without the need of quarterly financial reporting,
dispense with listing related expenses.

Although the completed projects, The Marq on Paterson Hill and Hilltops, command high margins, the slow sales progress have been a drag to its earnings, as seen in the weak results for the 9M12 (PATMI $2.9mn).

With that we see a daunting task for the share price to close the gap to its RNAV of $2.87 at the current pace of sale. The current offer price of $1.80 presents a reasonable opportunity for its shareholders to an early exit in our view.

We increase our target price to $1.80 to reflect the current offer and maintain our Neutral recommendation. We shall make further advice after evaluating details in the offer document, which will be dispatched to shareholders not earlier than 14 days and not later than 21 days from the announcement date.