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Posts Tagged ‘LCD Global’

HPL: More than “fair and reasonable”?

In Corporate governance, Financial competency, Property on 09/06/2014 at 4:38 am

The second revised buyout offer for Hotel Properties Limited (HPL) is considered to be “fair and reasonable” by the independent financial adviser to HPL. 68 Holdings, a consortium led by tycoon Ong Beng Seng and Wheelock Properties, had raised its bid a second time to $4.05 per share last month.

CIMB’s opinion on the offer is unchanged from its earlier report issued after the consortium first raised its offer price from $3.50 a share to $4. The updated report by CIMB was released in a supplementary letter to shareholders by HPL’s board of directors yesterday.

On the second revised offer of $4.05 a share, CIMB’s recommendations to HPL shareholders are also unchanged. (BT last Fri)

Given that the first offer was already “fair and reasonable”, shouldn’t this be an offer that is “more than fair and reasonable”?

Or the first one should have been “neither fair nor reasonable”? It was a low ball bid?

In 2002, the independent adviser to the board of Optus had come out with the opinion that far from paying too much, the offer is actually “unfair”.Independent adviser, Grant Samuel said the SingTel offer was “unfair”, but recommended the offer and said “while it is not fair, it is reasonable”. As a result, the directors of Optus recommended the deal to shareholders.

The M&A boutique said the deal was unfair based on valuation techniques, but said it was  reasonable because if there wasn’t an offer, Optus’ share price would be trading at lower levels: “In assessing the fairness of the offer, Grant Samuel indicates that its judgement of fairness is at the margin, and that while the Singtel offer is not fair, it’s only just not fair.”

Well, many S’poreans tot, at the time, that that the price paid was unfair and unreasonable to SingTel investors (self included). Turns out we are right even today, it seem. If it wants to float Optus today, there would be a small gap of a bn or so A$ between its purchase p-rice and valuation of Optus today: small change leh.

Coming back to the HPL offer, CNA reported last week in relation to another takeover offer, “Minority shareholders are becoming increasingly disillusioned with boilerplate advice from independent financial advisers (IFAs) and are questioning their usefulness, the head of the Securities Investors Association of Singapore (SIAS) said on Friday (June 6).”*

To which the retort from bidders and IFAs would be, “They would say that wouldn’t they? They want unfair and unreasonable prices to be paid for their shares.”

*Cont’d

The remarks by SIAS President & CEO David Gerald came in a statement noting the dissatisfaction on the part of minority shareholders over a buyout offer for LCD Global, a hospitality and investment company, at S$0.17 a share.

“SIAS notes that while the IFA report has indicated that the offer is fair, based on a historical perspective, the offer does represent a discount to NAV at S$0.27,” …

 

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