Keppel offers to acquire SPH, excluding media business, in S$3.4 billion deal

SINGAPORE: Singaporean conglomerate Keppel Corp said on Monday (Aug 2) it would offer to acquire and privatise Singapore Press Holdings (SPH), excluding the newspaper publisher's media business, in a deal that values SPH at S$3.4 billion.

The deal includes S$1.2 billion worth of SPH REIT units which SPH will be distributing to its shareholders.

"Successful completion of the scheme will see SPH eventually delisted," said SPH in a media release. SPH will also be a wholly-owned subsidiary of Keppel. 

SPH shareholders will receive cash of S$0.668, as well as 0.596 Keppel REIT units and 0.782 SPH REIT units per share. 

"Keppel will hold a remaining stake in SPH REIT and Keppel REIT of approximately 20 per cent each," added SPH.

SPH's CEO Ng Yat Chung said "the outcome is the result of a strategic review process that has taken place over many months". 

"We took the first step with the media restructuring to ensure a sustainable future for the media business, while removing its losses from SPH," said Mr Ng. 

"The next step was a thorough process to unlock and maximise value for all shareholders for the remaining company.

"With the privatisation offer from Keppel, shareholders now have an opportunity to realise the value of their SPH shares at a premium of 39.9 per cent to the last traded price before the strategic review was announced."

However, the scheme is subject to approval by SPH and Keppel shareholders, and other conditions including regulatory approvals. 

One of the conditions is that shareholders must approve the restructuring of SPH's media business. 

In May, SPH announced that it would transfer its media business into a not-for-profit entity amid the ongoing challenge of falling advertising revenue. 

The restructuring exercise involves transferring the entire media-related business of SPH to a newly incorporated wholly owned subsidiary, SPH Media Holdings.

READ: Many governments helping their country’s media; SPH case no different: Shanmugam

During an online press conference on Monday, Mr Ng reiterated that the proposed restructuring in SPH's media business will be voted on around the end of August or early September by shareholders. 

If it succeeds, Keppel's privatisation offer would be on the table. 

"With this offer, when shareholders consider whether to approve the spin-off of the media business, they will have a firm number on the table that they can potentially enjoy if they approve the restructuring," he said. 

"The two are linked in the sense that the scheme is contingent on the first one passing. If one fails, both fail." 

READ: SPH to restructure media business into not-for-profit entity amid falling revenue

In its press release, Keppel added that SPH possesses a "quality portfolio" of businesses and assets which are strongly aligned with Keppel’s business.

Keppel CEO Loh Chin Hua said it is "a rare opportunity" to acquire SPH’s non-media portfolio. 

"Given Keppel’s business model and focus areas, we are uniquely positioned to enhance and unlock the value of SPH’s portfolio," said Mr Loh. 

"The two companies are already close partners in businesses such as M1, Prime US REIT and the development of the data centre at Genting Lane in Singapore," he added. 

Asked about whether the acquisition would result in potential job losses, Mr Ng said during the press conference, "If you look at Keppel's rationale (for acquiring) SPH's portfolio businesses, they are acquiring a good portfolio in areas where we have relative strength."

He listed SPH's acquisition of nursing homes and student accommodation as examples. 

"They are fully committed to integrating SPH personnel into the wider Keppel ecosystem. My personal view is that with Keppel, the staff of SPH will have great opportunities for growth and career development in a much bigger ecosystem," he said.