Battle For Straits Trading Hots Up As Lees Raise Offer

Source : The Business Times, 15 February 2008

Family pitches revised bid at $6.55 a share.

The tussle for The Straits Trading Company looks set to intensify as the Lee family yesterday raised its offer price to $6.55 per share.

The revised offer, made by Lee Latex’s wholly-owned subsidiary Knowledge Two Investment Pte Ltd, is marginally higher than the last offer of $6.50 made by The Cairns, a subsidiary of the Tan family’s holding company Tecity. But it is 65.4 per cent higher than the audited net asset value per share of Straits Trading and 13.7 per cent higher than the Lees’ own last offer of $5.76 a share.

In an announcement to the Singapore Exchange last night, Knowledge Two also spelt out its intentions for the offer, which included continued development and growth of Straits Trading’s existing businesses and representation on the company’s board.

In addition, if the Lee family continues to control the largest single block of shares after the close of the offer, it intends to ‘propose to STC (Straits Trading Co) to engage a financial adviser to conduct a study on the financial performance of STC and to recommend possible steps to take to further unlock value in STC for the benefit of shareholders’.

Apart from that, the Lee family has no immediate plans for any major changes relating to Straits Trading, including redeployment of fixed assets or the employment of existing employees.

The bidding war for Straits Trading - whose core businesses include interests in tin mining and smelting, hotel operations, property , and investment holdings - was triggered early last month after The Cairns, a privately-held investment firm controlled by family members of the late Tan Chin Tuan, made a conditional cash offer for the firm at $5.70 per share. About two weeks later, the Lee family counterbid with an offer price of $5.76 a piece. This was followed by a revision of offer by the Tan family on Jan 28 to $6.50 per share.

The Lee family, who are descendents of the late philanthropist Lee Kong Chian, own 33.42 per cent of Straits Trading including holdings through concert parties OCBC and Great Eastern Holdings. On the other hand, the Tans own more than a fifth of Straits Trading through Tecity.

Apart from owning stakes in one of the world’s largest tin smelters, Straits Trading also runs 14 hotels, mostly in Australia and New Zealand, and China. In addition, the group owns commercial and residential properties in Singapore and Malaysia.

The bidding war for Straits Trading has since driven the share price of the company to record highs in the past month. The counter last traded at $6.55.