PrimePartners Corporate Finance, as independent financial adviser for the proposed acquisition of Boustead Projects by Boustead Singapore, is of the view that the offer is “not fair” but “reasonable”.
Boustead Singapore plans to privatise its separately listed subsidiary Boustead Projects at 95 cents per share.
The current offer price is an improvement from the original offer price of 90 cents was revised after concerned parties such as the Securities Investors Association of Singapore weighed in, calling for a better offer closer to Boustead Projects’ NAV of $1.265 per share.
According to PPCF, it sees the offer as “not fair” as 95 cents is short of the estimated valuation range of between $1.17 and $1.38.
On the other hand, PPCF says that the offer is “reasonable”, as it appears likely that the market price following the offer announcement to date is supported by the offer.
PPCF notes that after the offer was first tabled at 90 cents, Boustead Projects’ share price ranged between 91 and 99 cents.
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After the offer price was revised to 95 cents, Boustead Projects shares changed hands at a level closer to that level instead.
PPCF also points out that prior to the offer, Boustead Projects have been thinly traded at an average of just 137,000 shares per day, or, 0.16% of the free float.
“Based on our opinion, we advise the independent directors to recommend that shareholders accept the offer, unless shareholders are able to obtain a price higher than the final offer price on the open market, taking into account all transaction costs in connection with open market transactions,” says PPCF.
Boustead Projects closed at 95 cents on March 13.
