Keppel Corp’s offer for Keppel Land “not fair but reasonable”: KPMG

Keppel Corp’s offer to buy over the remaining shares of Keppel Land for up to S$3.2 billion has been described as “not fair but reasonable” by independent financial adviser KPMG Corporate Finance.

KPMG Corporate Finance, which is advising Keppel Land’s independent directors, said that while Keppel Corp’s base and higher offer prices of S$4.38 and S$4.60 per share were made at substantial premiums to Keppel Land’s share price prior to the offer, the offer prices were below Keppel Land’s sum-of-the-parts (SOTP) estimated valuation range of S$6.58 and S$6.79 per share.

“In determining that the offer is not fair, we have referenced the SOTP valuation which provides the intrinsic value of the shares,” KPMG said in a report. The report was contained in a circular sent to Keppel Land shareholders on Thursday (Feb 26).

KPMG, however, also noted that the offer was reasonable given the significant premium.

“As at the Latest Practicable Date, the offeror already owns and controls 54.6 per cent of the total issued shares, excluding treasury shares, meaning that it already has statutory control and making it unlikely that there will be another bidder offering better terms in the near term,” KPMG added.

Keppel Corp, the world’s largest maker of offshore oil rigs, last month made a bid to take Keppel Land private by offering a base offer price of S$4.38 for each Keppel Land share. A higher offer price of S$4.60 per share will be paid if Keppel Corp manages to take the developer private.

The Keppel Corp offer values Keppel Land at between S$6.8 billion and S$7.1 billion.

Keppel Land’s independent directors said they concured with KPMG’s assessment of the offer.

As such, the independent directors recommend that shareholders accept the offer.

If shareholders did not believe that the compulsory acquisition threshold will be reached, they could sell their shares in the open market if they are able to obtain a price that is higher than the base offer price.

Keppel Land shares were last traded at S$4.53 apiece.

Source : Channel NewsAsia – 26 Feb 2015

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