Bayberry is the name given to the combined entity comprising Keppel Offshore & Marine (KOM) without its legacy rigs and associated receivables, and all of Sembcorp Marine (SCM). Based on discounted cash flow valuations done by DBS Bank, KOM will make up 56% of Bayberry, and SCM 44%. SCM’s shares will be exchanged for shares in Bayberry on a 1-to-1 basis. The price at which SCM’s shares are exchanged is $0.122, the volume weighted average price (VWAP) of the 10 days up to April 26.
Since SCM’s shares outstanding are 31.4 billion, its share in Bayberry is valued at $3.83 billion. Because of the 56:44 ratio, Bayberry will issue 39.9 billion shares to KOM, valuing KOM (ex-legacy rigs etc) at $4.87 billion. These are theoretical pro forma valuations.
How Bayberry trades once it is listed — assuming that approvals from regulators and agencies in the geographies in which KOM and SCM have operations, and from shareholders are received — depends on how SCM trades ahead of Bayberry’s listing. This is because Bayberry’s valuation is tied to SCM’s VWAP before the KOM-SCM merger conditions were announced.