As a potential bidding war emerges over Singapore Press Holdings (SPH), UOB Kay Hian Research analysts Llelleythan Tan and John Cheong recommend shareholders to accept “the highest offer” on the table: the original bid by Keppel. 

Cuscaden Peak announced that it had submitted a proposal to acquire all of SPH for $2.10 fully in cash per share at a consideration of $3.4 billion, narrowly edging out Keppel’s original cash-plus-share offer of $2.099. 

“With SPH’s prized assets on the line, we reckon that a bidding war is imminent. However, barring any new offer, we recommend shareholders to accept the highest offer which is currently Keppel’s offer at $2.15/share over Cuscaden’s,” write Tan and Cheong. 

See: With a surprise all-cash potential bid, what does Temasek-linked consortium see in SPH?

See also: Consortium comprising Mapletree, CLA, Ong Beng Seng and Hotel Properties make rival offer for SPH

See also: Cuscaden confirms chain offer for SPH REIT, if made, will be 96.4 cents

In a Nov 2 note, Tan and Cheong note that the offer price represents an upside of 1.4% against the share price of $2.12.

“With the new full cash offer by Cuscaden of S$2.10, SPH is valued at 0.9 times FY2022F price-to-book value (P/B), and 19.2 times FY2022F price-to-earnings ratio (PE),” write Tan and Cheong. “However, given the recent rally in share prices for Keppel REIT and SPH REIT, we recommend shareholders to accept the highest offer, which is currently Keppel’s offer at a higher valuation of $2.15/share, barring a superior competing offer for SPH as a whole.”

This, however, is dependent on potential share price movements. Unlike the consortium’s all-cash offer, Keppel’s offer is to be met in a mix of 66.8 cents in cash, 0.596 Keppel REIT units and 0.782 SPH REIT units per share, which would leave SPH minorities with odd lots.

SPH has noted that Cuscaden’s offer is not a binding agreement and has not been accepted by SPH. The total consideration for the offer will not be reduced or adjusted for the $34 million break fee between SPH and Keppel.

Some other conditions include the completion of the demerger of SPH’s media business, which has been approved by shareholders in September and is expected to be completed by December. 

As at 12.30pm, shares in SPH are trading flat at $2.12; while shares in Keppel are trading 2 cents lower, or 0.37% down, at $5.31.

As at 12.30pm, units in SPH REIT are trading 1 cent lower, or 1.0% down, at $1.03; while shares in Keppel REIT are trading flat at $1.13.