SPH bidding war: Keppel waives its walk-away right under MAE clause

CEO Loh Chin Hua said the move was a “deliberate decision” on Keppel’s part.

Keppel has waived its walk-away right under the Material Adverse Effects (MAE) clause in a bid to win the acquisition war over Singapore Press Holdings’s (SPH) shares.

This was announced by Keppel CEO Loh Chin Hua in a briefing organised by Securities Investors Association Singapore.

Loh said it was a “deliberate decision” on Keppel’s part to waive its walk away right to improve the attractiveness of its offer.

“Based on market precedents, it is not common for an offeror with an MAE clause to waive it before shareholders have decided on the offer,” the Keppel CEO said.

Keppel’s final bid of $3.8b for all SPH shares is lower than Cuscaden’s $3.9b offer.

During the briefing, Loh also cited other factors which make their proposition a “win-win” for both parties.

Loh said their offer provides the shortest time to payout by mid-January 2022 for SPH shareholders if the deal is approved by the High court by end of December 2021.

SPH shareholders will also get “future cash distributions from SPH REIT and Keppel REIT,” once the deal is completed, according to Loh.

“In addition, they will be able to receive Keppel REIT units at a 10% discount to its NAV as of 30 September 2021. The Keppel REIT units and SPH REIT units that SPH shareholders will receive in mid-January 2022 will have accrued distributions, which unitholders of Keppel REIT and SPH REIT will be entitled to receive, after the transaction is completed,” the Keppel chief added.

Keppel, meanwhile, assured that their increase in cash consideration of $0.20 per SPH share, “would result in only a marginal increase in pro forma net gearing post-transaction of 0.03x.”

“Our balance sheet will remain healthy post-transaction. While there will be a short-term increase in net gearing post-transaction, it will remain below 1.0x,” he said.

SPH is expected to vote either in favour or against KEP’s scheme on 8 December 2021.

If SPH shareholders reject KEP’s scheme, Cuscaden’s scheme meeting, which can only be held eight weeks after KEP’s, would then be held.