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OCBC's final offer of $25.60 for GEH is 'not fair but reasonable' says EY; advises shareholders to accept

Goola Warden and Nicole Lim
Goola Warden and Nicole Lim • 5 min read
OCBC's final offer of $25.60 for GEH is 'not fair but reasonable' says EY; advises shareholders to accept
EY advises shareholders to accept the offer, or sell their shares if they can offer a higher price than the offer price. Photo: Albert Chua/The Edge Singapore
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Oversea-Chinese Banking Corporation (OCBC)’s offer to buy Great Eastern Holdings G07 -

(GEH) for $25.60 per offer share has been described by its independent financial advisor (IFA) EY as “not fair but reasonable”. But, EY is advising GEH’s independent directors to accept the offer. 

The much awaited recommendation by EY, was released just before 8pm on June 14. The release notes: “Having regard to the considerations set out in this letter and as discussed above, the information available to us as at the latest practicable date and subject to the qualifications made herein, we are of the opinion that the financial terms of the offer are, on balance, not fair but reasonable. Taking the factors we have considered, we advise the independent directors to recommend that shareholders accept the offer.” 

EY goes on to suggest that shareholders may wish to sell their shares in the open market if they are able to obtain a price higher than the offer price, net of related expenses (such as brokerage and trading costs). 

“We advise the independent directors to consider highlighting to the shareholders that the current share price appears to be supported by the offer and there is no assurance that the price and liquidity of the shares will remain at current levels after the close of the offer and the current price and liquidity performance of the shares is not indicative of the future price performance levels of the shares," EY says. 

Ong Chin Woo, a minority shareholder who has written to GEH’s board asking for ways to have more liquidity in GEH’s stock, says: “Today, we feel affirmed by the Independent Financial Advisor's (IFA) statement that the offer is “not fair".

“We acknowledge OCBC's right to maximise its self-interests within legal boundaries. However, we believe that in accordance with principles of good corporate governance and leadership, OCBC could have done more for GEH minority shareholders, who are essentially its "junior partners" in the insurance business. We are advocating for an amicable resolution and express our disappointment at the treatment of GEH minority shareholders. We hope for positive developments soon.” 

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Ong is aware that different shareholders have different financial considerations. “At this critical juncture, with each shareholder's financial circumstances being unique, I strongly advise careful consideration of the IFA's recommendations and consultation with your brokers and financial advisors before making any decisions. Personally, I intend to retain some GEH shares as a commemoration of this significant journey we have walked together, even if GEH is delisted,” he says.

GEH must announce that the total number of shares held by public hands has fallen below 10%. After which, SGX may suspend trading of all the listed securities of GEH on the exchange. 

OCBC today announced that it will maintain its offer price for 54,732,310 shares or 11.56% stake in GEH it does not already own at $25.60 per share, as stated at the time the offer was first announced on 10 May 2024. 

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“This offer price is final. The closing date of the offer is extended to 12 July 2024. OCBC does not intend to increase the offer price or further extend the closing date,” the bank said in a statement. As at end 13 June 2024, OCBC has received acceptances for 1,743,475 Great Eastern shares or 0.37% of the total number of Great Eastern shares from Great Eastern shareholders. This raises OCBC’s stake in Great Eastern to 88.80%, and to 89.01% if the number of shares held by OCBC’s concert parties is included, OCBC adds.

The circular by EY notes that taking into consideration the listing status of GEH, should trading in shares become suspended and OCBC is unable to exercise its rights or meet the conditions set out by the SGX RegCo to waive compliance with the voluntary delisting requirements related to the listing manual, shares in GEH might be suspended indefinitely until a resolution is achieved.

Another minority holder says. "it seems to me that the exit offer does not meet rule 1309 of the SGX rulebook which states that the offer must be both fair and reasonable.  

A market watcher points out that Boustead Projects went through a similar journey. In February 2023, Boustead Projects was the subject of a privatisation offer from its major shareholder, Boustead Singapore F9D -

, for 90 cents. EY, which was the IFA, had stated that the offer was “not fair but reasonable”. 

Subsequently, SGX said: “If free float is lost during an offer, the offeree company’s securities will be suspended at the close of the offer. Thereafter, the company is obliged to restore free float, failing which SGX RegCo may direct the company to delist and provide an exit offer in compliance with the listing rules on delisting. The independent financial adviser must opine that the exit offer is both fair and reasonable.”

In September 2023, SGX directed the boards of both companies to delist Boustead Projects but to also make an exit offer that was both fair and reasonable. Boustead Singapore made a new exit offer of $1.18. However, the higher offer price was not extended to shareholders that accepted earlier. 

Wong Hong Sun, who is listed as GEH’s third largest shareholder and whose grandfather was chairman of GEH, is unlikely to accept the offer. He says: ”The offer price is reasonable for OCBC but not for me. I don’t think buying a stock at half price is reasonable. I plan to hold on to my shares and if the price goes down, below the offer price, I will buy some more GEH shares.”

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