SINGAPORE: Flagship carrier Singapore Airlines (SIA) announced on Monday (Jan 4) that it has increased the offer price for Tiger Airways shares that it does not already own, to S$0.45 per share. This final offer made to Tiger Airways shareholders values the budget airline at approximately S$1.125 billion.
In a news release, the national carrier said the new offer price is a nearly 10 per cent increase from the S$0.41 one, which is the Voluntary Conditional General Offer announced on Nov 6. This is a 45 per cent premium to Tigerair's closing price of S$0.31 the day before the takeover bid was announced.
SIA also said the closing date for its offer has been extended to 5.30pm on Jan 22. This is a second extension, after it announced a Dec 28, 2015 deadline was shifted to Jan 8.
In a filing on the Singapore Exchange, SIA also confirmed that it now controls 77.48 per cent of Tigerair as of Monday. This is an increase of the 74.5 per cent announced last week, but still short of the 90 per cent needed to delist and privatise the budget airline.
Said SIA CEO Goh Choon Phong: "Tiger Airways' Independent Financial Advisor and Tiger Airways' Independent Directors had already recommended that shareholders accept based on the initial offer price of S$0.41, which we considered to be compelling based on the significant price premium that was being offered."
He added that the new offer price will not be revised further. "We are optimistic that with this final upward revision of the offer price, those shareholders who have not already accepted the offer will consider it favourably," Mr Goh said.
SHAREHOLDERS ADVISED TO REVISIT IFA REPORT BEFORE MAKING DECISION
In a press statement, Securities Investors Association (Singapore) President David Gerald advised current shareholders to revisit the IFA report before making a decision on accepting SIA's offer.
"SIAS is pleased to note that SIA has responded favourably to our appeal on behalf of Tiger Airways minority shareholders by raising its offer from S$0.41 to S$0.45 and also by extending the offer period to Jan 22, 2016," said Mr Gerald.
He added that some minority shareholders have still voiced their concerns that the new offer undervalues what long-term shareholders have paid, and have sought advice from SIAS on how they should proceed.
Mr Gerald noted that the association can assist shareholders with making an informed decision, but not advise on how they should vote.
WHAT HAPPENS IF A SHAREHOLDER DOES NOT ACCEPT THE OFFER
According to SIAS, if SIA manages to achieve a 90 per cent vote, the airline will be able to privatise Tiger Airways. Shareholders who have no accepted the offer will remain a shareholder of the low-cost airline, but Tiger Airways would not be listed and there may be difficulties in trading shares.
"Nevertheless, under the Singapore take-over code, he will have an additional three months to decide to tender his Tiger Airways shares to SIA, and SIA will have to honour the original offer price. After this three-month period, SIA is not obliged to accept his Tiger Airways shares, and he will continue to remain a Tiger Airways shareholder as an unlisted company," Mr Gerald said. He added that if the shareholder wishes to sell his or her shares thereafter, he or she will have to find a buyer privately and determine the price as well.