OCBC intends to delist GE if the free float requirement of 10 per cent is not met, noted EY in a letter to independent directors that advised them on making recommendations to GE shareholders.
OCBC’s offer to Great Eastern shareholders ‘not fair but reasonable’, shareholders should accept it: EY Prisca Ang Business Correspondent UPDATED JUN 14, 2024, 09:52 PM FacebookTelegram SINGAPORE – OCBC’s offer to buy the remaining shares of Great Eastern from minority investors is “not fair but reasonable”, said independent financial adviser Ernst & Young Corporate Finance on June 14.
In a separate statement after EY’s filing to the Singapore Exchange, OCBC said its $25.60 a share offer price is final and will not be increased. The bank also extended the offer’s closing date from June 28 to July 12.
OCBC made a $1.4 billion bid on May 10 to take its insurance arm GE private following recent shareholder unhappiness over falling returns. Its voluntary, unconditional general offer was for the 11.56 per cent stake in GE that it does not own.
The offer price represented a 36.9 per cent premium over GE’s closing price of $18.70 on May 9. However, it was also 30 per cent lower than the insurer’s $36.59 per share embedded value as at the end of the insurer’s last financial year.
OCBC had received acceptances for 1.74 million GE shares, or 0.37 per cent of the total, as at the end of June 13.
This raises the bank’s stake in GE to 88.8 per cent, and to 89.01 per cent if the number of shares held by OCBC’s concert parties is included. Concert parties refers to a group of investors who buy shares in the same company.
Under SGX rules, using Boustead Projects as an example in '23, even if 90% reached, in order to DELIST the co. the offeror needs to make a FAIR & REASONABLE offer to remaining holders. In Boustead's case, the initial 90c offer was raised to S$1.18 BUT the early acceptances did NOT benefit from the final raised offer.
Presently, and mindful of the 10% free-float rule, investors in GEH are concerned that the purchase price on June 19 is at a significant discount to GEH’s embedded value of $37.81 per share in FY2022. This, in turn is 2% lower than FY2021’s $38.57.
Embedded value is the sum of the value of In-Force Business and the value of the adjusted Shareholders’ Funds. The value of the In-Force Business is calculated using cash flow assumptions for future operating experience and are discounted at a risk-adjusted discount rate. The value of the In-Force Business varies from traditional DCF methods to arrive at an NPV because the risk-adjusted discount rate and allowance for the cost of holding statutory reserves for risk are approximates.
The economic value of one year’s new business rose by 7.1% y-o-y in FY2022 to $860.4 million. However, shareholders’ equity fell by 6% to $9,431.4 million.
The closer OCBC’s stake gets to 90%, the stronger the likelihood of compulsory acquisition by OCBC
Firstly, even after fair and reasonable, it also have to meet threshold of 75% valid acceptance. Then for compulsory acquisition, is 90% of independent shareholder.
Oversea-Chinese Banking Corporation (OCBC) has issued a response to the letter sent by the Securities Investors Association Singapore (SIAS) on June 21.
In its letter, SIAS posed six questions pertaining to OCBC’s decision to stick to its original offer price of $25.60 per Great Eastern (GEH) share, key factors that led to the offer price, and more.
In its response dated June 27, OCBC explains that it already considered the “methodology, analysis and opinion” of its independent financial adviser (IFA), EY, before making the offer.
“We note the IFA, following the detailed analysis it has undertaken, had considered the traded multiples of comparable companies across various metrics, versus the multiples implied by our offer,” said the bank, adding that its offer price represented a 36.9% premium to GEH’s last-traded price the day before its privatisation announcement on May 10.
The letter, dated June 27, comes after GEH’s free float fell below the regulatory 10% on June 24.
“We further note that the IFA has opined that the offer is not fair but reasonable and has advised the independent GEH directors to recommend that GEH shareholders accept our offer and the independent GEH directors have concurred with the IFA’s recommendation,” continues the release.
Looks like by the time the deadline for the exchange arrives, Great Eastern would already be swallowed by OCBC & the original agreement has to be significantly amended to reflect the much enlarged cash pile & the corresponding reduction in the equity asset column.
Don't think Sg Bagan will allow OCBC to buy over GE shares from Kuchai. Already 90%+ of Kuchai's shareholders voted in favour of the resolution so there is no turning back unless there is another resolution to overrule the earlier resolution. I think OCBC needs to negotiate with Sg Bagan and not Kuchai. As it stands, Sg Bagan got the upper hand and not Kuchai. Just my opinion.
There must be a good reason why they pushed it so far forward to 29 Oct when the closing date to accept the OCBC offer is 12 July. Is there a hidden message? Read between the lines.
Oversea-Chinese Banking Corporation’s offer for Great Eastern Holdings G07 0.00% closed at 5.30pm on July 12. OCBC now holds 93.52% of GEH. On June 25, OCBC’s ownership crossed 90%. As a result, GEH shares will be suspended on Monday July 15.
Accordingly, the offer is no longer open for acceptance and any acceptances received after 5.30 p.m. (Singapore time) on 12 July 2024 will be rejected. However, shareholders who have not accepted the offer can still require the offeror to acquire their shares at the offer price pursuant to Section 215(3) of the Companies Act.
This says the transferee or offeror must, within one month from the date of the transfer, give notice to holders of the remaining shares that haven’t been tendered, that they can still tender their shares, and OCBC will have to accept them
The date of transfer refers to the date on which OCBC’s shareholding crossed 90%, on June 25. On July 24, OCBC will likely be announcing that GEH shareholers can still accept the offer at $25.60 per share and this offer will be open for three months from July 24.
OCBC group CEO Helen Wong unveiled a One Group strategy last year. GEH is likely to be part of that strategy. Interestingly, analysts have pointed out that OCBC doesn't charge GEH any bancassurance fees as these are not indicated in its annual report. In 2019, United Overseas Bank U11 0.03% and Prudential renewed a bancassurance agreement for 15 years for $1.5 billion over the course of the 15 years.
The notice did not mention the ex-date for taking over the assets and liabilities of Kuchai. Even if Sg Bagan doesn't sell the GEH shares to OCBC, it's still a valuable shares to hold. For long term, I think Sg Bagan's share should fly.🤞
Lessons from OCBC’s offer for Great Eastern: be unafraid to hold out, but do so with eyes open Earn dividends from shares that are suspended from trading and wait for a richer future offer
Leslie Yee Leslie Yee Published Tue, Jul 16, 2024 ·
On July 24, OCBC will likely be announcing that GEH shareholders can still accept the offer at $25.60 per share and this offer will be open for three months from July 24.
There is still hope that after the kuchai SBagan swap deal...
SBagan can still sell the Great Eastern shares to OCBC within the three months
Great Eastern, though suspended, has announced a fantastic set of results & an improved dividend of 45c per share payable in a month, so I believe the two sister companies should benefit.
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OCBC intends to delist GE if the free float requirement of 10 per cent is not met, noted EY in a letter to independent directors that advised them on making recommendations to GE shareholders.