Takeover activity sends STI surging

GOOD OFFER: Analysts believe the $2.22 per share offer for CapitaMalls Asia, which runs malls like ION Orchard, is a chance for investors to exit the stock.


    Apr 16, 2014

    Takeover activity sends STI surging

    SINGAPORE shares powered to a seven-month high yesterday as a flurry of takeover activity ignited enthusiasm for the local market.

    The benchmark Straits Times Index surged 31.49 points or 0.98 per cent to 3,246.32, the highest level since Sept 19 last year.

    CapitaLand and CapitaMalls Asia were the drivers.

    Trading in both was halted on Monday as CapitaLand unveiled a cash offer for the rest of CapitaMalls Asia, its retail malls subsidiary. CapitaLand wants to delist CapitaMalls Asia and the $2.22 per share offer is conditional on it getting enough acceptances to raise its stake from 65.3 per cent to 90 per cent.

    CapitaMalls Asia jumped 38.5 cents or 21.3 per cent to $2.19 yesterday, close to the offer price. And CapitaLand was ahead by 19 cents or 6.5 per cent to $3.11.

    Analysts think the offer will be good for shareholders of both companies.

    "Strategically, we see this deal as being positive for CapitaLand in the medium term," said DBS Group Research. "The offer would allow CapitaLand to fully integrate CapitaMalls Asia and enhance their competitive strength in integrated developments."

    DBS kept its "buy" call on CapitaLand but reduced the target price to $3.85 from $3.90.

    OCBC Investment Research believes that CapitaMalls Asia shareholders should accept the offer.

    "CapitaMalls Asia's shares have mostly traded below its $2.12 IPO price since its listing in 2009 and this provides an opportunity for investors to exit at a reasonable valuation."

    An offer was also tabled for Hotel Properties (HPL) by a company owned by HPL's controlling shareholder, Mr Ong Beng Seng, and Wheelock Properties, at $3.50 a share. The intention is to maintain HPL's listing but that may be re-visited if the free float falls below 10 per cent.

    HPL rose 40 cents or 12.8 per cent to $3.53 while Wheelock Properties was ahead by seven cents or 4 per cent to $1.815.

    "[The] two property-related privatisation offers announced may also lift valuations of property-related stocks which have been sold down in recent months but this could be temporary as news within the sector remains grim," said NetResearch Asia.

    The Singapore Exchange fell eight cents or 1.1 per cent to $6.92. The two recent offers came amid attempts to privatise Chemoil Energy and Singapore Land and so led to more chatter that the market is hollowing out with too few big-name listings to replace the delistings.