Monday, 19 May 2014

Minorities' right to expect full value (2)

I wrote before about the offer to acquire all shares of CapitaMalls Asia (CMA) by CapitaLand (CL) .

Some moderate good news, CL has increased its offer price from S$ 2.22 to S$ 2.35, an increase of 6%. I still find the offer rather "stingy", but this makes it somewhat better.

It is now up to the minority investors whether they will accept this final offer or not.

From todays "The Business Times" (Singapore), "Bumper Q1 for M&A in Singapore":

It has been a busy first quarter for bankers, here and in other parts of Asia, with a slew of acquisitions and privatisation deals.

Bankers say that it has been a bumper quarter, lifted mainly by privatisations in the property sector, and that they see many more deals in the pipeline.

But some are also watching if greater public dissent by minority shareholders and activists could put a damper on the mergers and acquisitions (M&A) process, including that of pricing.

CapitaLand last Friday sweetened its privatisation offer for CapitaMalls Asia (CMA), of which it already owns about 70 per cent, following concerns that CMA had been undervalued, a point hammered home in a published commentary by former senior managing director at Temasek Holdings, Michael Dee.

Shareholder activism is here to stay, say market insiders.

"There is greater activism around these transactions," Axel Granger, head of M&A for South-east Asia at Bank of America Merrill Lynch, told The Business Times. "Investment bankers will have to pay more attention to the opinion makers. It is a natural evolution. It is something we have seen in the United States, and it is moving to Asia."

But Willard McLane, head of Asean corporate and investment banking at Citi, noted that the current level of activism in this region is still relatively modest.

"I don't see much shareholder activism in Singapore in the way we see it in the US, for example. We haven't seen a lot of cases where shareholders are publicly promoting agendas or blocking deals," he said.

A related article in the same newspaper: "Shareholder activism rises in S'pore".

A discussion about CMA and the offer price can be found on the "ValueBuddies" forum.

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