(Bloomberg) -- Keppel Corp Ltd. has offered to buy Singapore Press Holdings Ltd. for S$2.2 billion ($1.6 billion) to expand the conglomerate’s business in retail malls, student accommodation and senior living.
The proposed deal, expected to be completed in December, would come after SPH spins off its media assets. Keppel plans to delist as part of the transaction, the companies said in a statement Monday.
For Keppel, backed by Temasek Holdings Pte and with operations spanning from rig building to infrastructure and renewable energy, the move is in line with its 10-year plan to provide solutions for “sustainable urbanization,” it said. Mergers are part of the group’s efforts to unlock value in its asset portfolio.
Keppel is making the offer through a combination of S$1.08 billion of cash and S$1.17 billion worth of Keppel REIT units, the company said in a Singapore Exchange filing. Total consideration, including a distribution of SPH REIT shares, equates to S$2.099 per share, implying a total equity value of SPH at S$3.4 billion.
Trading of SPH shares was halted before the announcement. The stock last closed at S$1.88. Keppel shares were also halted.
SPH’s Chief Executive Officer Ng Yat Chung said the outcome is the result of a months-long strategic review process to solicit bids from interested parties. “With the privatization offer from Keppel, shareholders now have an opportunity to realize the value of their SPH shares at a premium,” he said in a statement.
SPH announced plans in May to carve out its media business into a non-profit entity amid a decline in advertising revenue. Last year, the group swung to its first full-year loss on record, based on data compiled by Bloomberg going back to 1990. Its media business accounted for more than half of its revenue while property made up about 38%, the data show.
If the acquisition is successful, Keppel will also explore unlocking value from SPH’s assets through possible new REIT listings or monetising certain liquid investments “when the timing is right,” the company said.
Keppel said last week it expects to achieve the higher end of its target to unlock S$3 billion to S$5 billion of assets by the end of 2023, which could include mergers or disposals. It’s also in talks to merge its offshore marine unit with Sembcorp Marine Ltd. and evaluating bids to sell its logistics business as it shifts its focus to become a developer of renewable energy and asset management.
Under its 10-year transformation plan dubbed Vision 2030 unveiled last year, initiatives include building floating infrastructure to provide easier and cheaper access to energy and developing data centers. Keppel will also tap into its landbank to improve its return on assets and look for growth from its M1 Ltd.’s digital solutions business.
Keppel has been monetizing over S$2.3 billion of assets since October, of which about half of the transactions have been completed, and it had received cash of about S$1.15 billion at the end of June, the company said in the statement.
(Add details of the deal in fourth paragraph.)
©2021 Bloomberg L.P.