The offer for SPH would give the Temasek group control of the Paragon Mall and other Singapore properties
Keppel Corporation’s plan to acquire Singapore Press Holdings’ real estate business is being challenged by a rival bid from an unlikely source: a consortium backed by state holding firm Temasek and hotel tycoon Ong Beng Seng.
Cuscaden Peak, a company formed by Ong and his SGX-listed Hotel Properties group and Temasek units CapitaLand and Mapletree, on Friday proposed an all-cash consideration of S$2.10 ($1.56) for each share of SPH. Completion of the transaction would result in Cuscaden incurring an obligation to undertake a chain offer for all the units in SPH REIT, the consortium said in a filing with the Singapore Exchange.
Keppel, whose biggest shareholder happens to be Temasek, in August offered the equivalent of S$2.099 per SPH share in a cash-and-scrip deal valuing the Straits Times publisher at S$3.4 billion ($2.5 billion). Both proposals are contingent on SPH spinning off its media business into a not-for-profit entity.
“Cuscaden wishes to emphasise that SPH has not entered into any definitive legally binding agreement with Cuscaden in relation to the proposed acquisition or the possible scheme,” the consortium said Friday.
Resort Empire
Billionaire Ong is best known for his chain of Hard Rock hotels and cafes, which he controls through Hotel Properties. The holding company, which he founded and controls through his majority stake, owns stakes in a portfolio of 38 hotels and resorts across 15 countries including the Four Seasons Singapore and the Hilton Singapore, as well as venues operating under the Hard Rock, InterContinental and Marriott brands.
Ong Beng Seng owns stakes in resorts, hotels and residential properties in 15 countries
Together with his wife Christina, Ong is estimated to have personal wealth of $1.45 billion, and his resort-dominated hotel empire seems to have survived despite seeing its annual revenue for 2020 drop 53.5 percent to S$258.8 million ($191.87 million), according to reports in financial media.
As of 31 December, Hotel Properties had S$95.7 million in cash on hand, of which S$4.2 million was already encumbered, against S$150.3 million in short-term borrowings.
In May this year, Hotel Properties raised S$125 million in debt financing by selling bonds bearing 3.75 percent interest due in 2028.
Strange Bedfellows
Under the newly minted partnership, companies controlled by Ong and Hotel Properties hold 40 percent of Cuscaden Peak, while CapitaLand and Mapletree own 30 percent each. Temasek in turn owns 52 percent of CapitaLand and the entirety of Mapletree.
Cuscaden’s offer pips the deal agreed upon earlier between Keppel and Singapore Press Holdings, an arrangement that would pay S$1.08 billion in cash and S$1.16 billion in Keppel REIT units to SPH shareholders, who would also receive S$1.16 billion in SPH REIT units from the media group.
SPH controls the manager of SPH REIT, a real estate investment trust that owns the Paragon, Clementi Mall, Rail Mall and other shopping centres in Singapore, as well as the Figtree Shopping Centre in Sydney and the Westfield Marion mall in South Australia. SPH directly owns the Seletar Mall and Woodleigh Residences in Singapore, as well as student accommodation in the UK and Germany.
Deal in Limbo
SPH underwent a strategic review in May and determined the need to restructure its media business — which includes the Straits Times, the Business Times and various newspapers published in Chinese, Malay and Tamil — and fulfil the potential of its real estate arm, culminating in the choice of Keppel as suitor.
Keppel and SPH previously worked together on the M1 and Genting Lane data centre joint ventures, which would come under Keppel’s ownership if it completed the acquisition. The two firms are also shareholders in the manager of SGX-listed Prime US REIT.
“The proposed acquisition of SPH is very much in line with Keppel’s Vision 2030, where we seek to grow Keppel’s business as a provider of solutions for sustainable urbanisation through organic and inorganic options,” Keppel chief executive Loh Chin Hua said in August.
SPH continues to be owned by a range of local Singapore shareholders, with Great Eastern Assurance holding the largest stake at 22.6 percent and OCBC Bank and trade union fund NTUC Income each holding over 16 percent. Temasek-controlled Singtel, DBS Bank and Fullerton Private Ltd combine to own over 27 percent.
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