Source : The Straits Times, Feb 19, 2008
THE battle for The Straits Trading Company went up another gear yesterday, with the family of the late Mr Tan Chin Tuan raising their bid yet again. This time, however, their offer is final.
Tecity, the family's investment vehicle, lifted its offer from $6.50 to $6.70 per share and extended the acceptance period to March 6.
This came after its rival bidder - the Lee family, who are OCBC Bank's main shareholders - raised their offer last Thursday.
The bidding war began in January, when Tecity offered $5.70 per share for Straits Trading, saying it wanted more control due to its historical ties with the firm.
Tecity, which has been a shareholder since the 1950s, now owns about 24 per cent of Straits Trading.
The Lee family own about 7 per cent of Straits Trading but control around 33 per cent through their shares in Great Eastern and OCBC, which are also Straits Trading shareholders.
Late last month, the Lee family countered Tecity by offering $5.76 per share. Tecity swiftly responded by raising its offer to $6.50, and the Lees returned serve last Thursday with an offer of $6.55.
Before the takeover tussle began, Straits Trading shares had an average price of about $4.70 over the last year, valuing it at $1.53 billion.
Tecity's $6.70 offer now values the minerals, hotels and property company at $2.18 billion, an increase in its market capitalisation of more than $500 million in just a couple of months.
Tecity chief executive Chew Gek Khim, granddaughter of Mr Tan, a former OCBC chairman, said her group's offer of $6.70 was final. Ms Chew said independent adviser CIMB had taken into account Straits Trading's financial performance and volatility in the stock market.
CIMB has revalued Straits Trading's assets at $6.52 per share.
Straits Trading announced last Saturday that for the year ended Dec 31, profits rose to $485 million from $194 million previously. The net asset value per share, which has not been revalued, works out to $5.62.
OCBC has said it will not sell its shares to either Tecity or the Lee family, while Great Eastern has yet to decide.
The question now is how the Lee family will respond.
They can opt to do nothing and hope the Tecity bid fails. Tecity needs about 27 per cent for its bid to cross the 50 per cent line and succeed.
If OCBC and Great Eastern do not sell their stocks, Tecity will have to rely on individual shareholders to shore up the numbers.
It remains to be seen if the Lee family will be willing to take the risk of sitting it out, given that they have clearly stated that they want to retain control.
However, if they trump Tecity's offer, they may end up having to shell out anything up to $1.4 billion, assuming all remaining shareholders, including Tecity but not OCBC and possibly Great Eastern, accept their offer.
Straits Trading shares closed three cents up at $6.70 yesterday.
FUNDAMENTALS
Independent adviser CIMB has taken into account Straits Trading's financial performance and volatility in the stock market.
MS CHEW, citing factors considered behind her group's final offer
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