Straits Trading Within Tans' Reach As Great Eastern Accepts Offer

Source : The Business Times, March 4, 2008

With over 50% stake, Tans' $6.70 offer will become unconditional

The takeover saga involving two of Singapore's most illustrious business families and one of its oldest companies is finally headed for a resolution.

Great Eastern Holdings (GEH), which holds a 19.92 per cent stake in Straits Trading Company (STC), announced yesterday that it would accept the offer of $6.70 a share from the Tan family's The Cairns.

Together with the Lee family's acceptance and further open-market purchase of a 4.91 stake by The Cairns yesterday, the Tan family's stake will now cross the 50 per cent mark, which will make its offer unconditional. Events have moved quickly in a matter of just around 24 hours.

On Sunday, the Lee family, which founded OCBC Bank, withdrew its own offer for Straits Trading and accepted the one made by the family of the late Tan Chin Tuan - who helmed the bank for many years.

Yesterday, GEH - an OCBC subsidiary - also broke its silence and decided to take up the Tans' offer. Its announcement came on a day when a commentary in BT had said it should spell out its stand.

GEH said a special committee it set up had carefully examined the offers that had been on the table - until the Lees withdrew theirs. 'The decision not to make any announcement earlier was deliberate due to the strategic nature of the group's shareholding in Straits Trading, as any premature announcement could influence the outcome of the competing offers,' it explained.

But it has now decided to accept the offer made by The Cairns, a subsidiary of Tecity which is a holding company of the late Tan Chin Tuan's family.

'Following careful and extensive deliberations and taking into consideration, inter alia, the advice of the (financial adviser) FA, the special committee has decided in the best interests of the GEH Group's policyholders and shareholders to accept The Cairns Pte Ltd (TCPL's) offer at the offer price of $6.70 per share,' the insurance firm said in a statement yesterday.

Earlier, in withdrawing its offer of $6.55 per share of the tin-mining company and accepting the competing offer from The Cairns, the Lee family had said: 'This has increased total STC shareholder value by approximately $326 million. Taking into account the foregoing as well as the current volatile market conditions, the offeror and the Lee family companies holding in aggregate approximately 7.1 per cent of the total number of issued shares, have decided to realise their investments in STC and accept the Cairns offer at $6.70 per share.'

All eyes are now on the Oversea-Chinese Banking Corp - the other major shareholder which owns 6.21 per cent of Straits Trading.

It said yesterday that it is still reviewing its options. OCBC last month rejected the takeover offers for its shares in Straits Trading, saying it could extract greater value for itself by staying put and adopting a more pro-active role in the company. The bank also noted that Straits Trading has a cash surplus of $347 million and a real estate portfolio worth at least $1.33 billion. It also said it would seek board representation at Straits Trading as well as request the board to appoint a financial adviser to study ways to unlock value and enhance shareholders' value.

Aberdeen Asset Management, which owns about 2.5 per cent of Straits Trading, said last week that it would choose the option that would realise the maximum value in Straits Trading.