SINGAPORE (Sept 25): Wheelock & Co announced its offer price of $2.10 for each Wheelock Properties (Singapore) (WPS) share and the offer closing date of 5.30pm on Oct 2 will be final.
See: Controlling shareholder of Wheelock Properties launches $2.10 per share offer
In a Tuesday report, OCBC Investment Research analyst Deborah Ong says there are three options available to shareholders, depending on when they bought the stock.
In Option 1, shareholders may choose to accept the offer. $2.10 in cash which represents a premium of 20.7% over the last transacted price prior to the announcement.
Meanwhile, the open market price of WPS has corrected 3% from $2.17 as of Sept 21 to $2.10 as of Sept 24 close after the latest announcement.
Option 2 is called the “wait for a Vard repeat”.
Vard Holdings as an example of an ongoing privatisation case which has seen two general offers by the same offeror.
Given the relatively low offer price, Ong says shareholders may decide to reject the offer in anticipation that the offeror will return with a higher offer price six months or more after the close of the first.
Ong says the probability of Wheelock coming back with another general offer with a higher offer price depends on how many shareholders decide not to accept the offer this time around and how eager the offeror is to delist WPS.
Finally, Option 3 will kick in if acceptances increase offeror’s stake to 90% or above.
The offeror will have a right to compulsorily acquire remaining shares at $2.10/share and even if the offeror does not exercise this right, remaining shareholders -- who did not accept the offer prior -- will have the right to require the offeror to acquire their shares at the last offer price.
In its recommendation, Ong says, “For shareholders who are in-the-money, we recommend accepting the offer to switch to other more attractive opportunities like Capitaland and UOL.”
For shareholders who bought Wheelock Properties (Singapore) after the current general offer announcement -- that is at more than $2.10, “we recommend waiting out for a second and better general offer, though there are also risks associated with this.”
Year to date, shares in WPS are up close to 10% at $2.11.
See also: Is offer for Wheelock Properties fair and reasonable?
See also: Thinking about the future of property stocks as market awaits better offer for Wheelock
