SINGAPORE (June 24): As an investor, I tend to look at corporate deals from the perspective of what it immediately means for a company’s shares. So, when CapitaLand announced its acquisition of Ascendas-Singbridge from Temasek Holdings in January, the aspect of the transaction that jumped out at me wasn’t that CapitaLand was expanding its footprint into new geographical markets and gaining exposure to properties that would benefit from “new economy trends” like e-commerce. Instead, the relative valuation at which CapitaLand had proposed to acquire Ascendas-Singbridge from Temasek and the manner in which it would fund the deal seemed much more important.

To cut a long story short, CapitaLand expects the transaction, which is scheduled to be completed by the end of this month, to be marginally accretive to its earnings per share but dilutive to its net asset value (NAV) per share and leave it with significantly higher gearing. The one saving grace was that CapitaLand’s top executives seemed confident that minority investors would not have to cough up any capital to fund the deal and could expect their dividends to be unaffected by the transaction. That is what I understood CapitaLand CEO Lee Chee Koon to have said when I watched a video of the briefing held immediately after the deal was unveiled.

However, if minority investors were hoping for confirmation of CapitaLand’s intention to maintain its dividend per share in the circular to shareholders two months later, they would have been disappointed. That document only went as far as saying: “CapitaLand has a policy on the payment of dividends. Barring unforeseen circumstances, CapitaLand’s dividend policy is to declare a dividend of at least 30% of the annual sum of operating profit after tax and minority interests, portfolio gains or losses and realised revaluation gains or losses (cash Patmi). The dividend policy of Capita Land is not expected to change as a result of the proposed transaction.”

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