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SMRT has received an offer of privatisation from state-owned investment holding company Temasek Holdings.
Belford Investments, a wholly-owned subsidiary of Temasek, is offering $1.68 in cash for each share, representing a 9.1% upside to SMRT’s last traded price of $1.54 on July 15.
With an outstanding issued share capital of about 1.53 billion shares, the offer price values SMRT at about $2.6 billion. As Temasek already owns some 54% of SMRT, the takeover would cost it nearly $1.2 billion.
“Privatisation will provide SMRT with greater flexibility to focus on its primary role of delivering safe and high-quality rail service, without short-term pressures of being a listed company, in the midst of its transition to a new regulatory framework under the New Rail Financing Framework,” say SMRT and Temasek in a joint filing.
There will be no special dividend arising from sale as net proceeds received will substantially be used to pay part of its debt of $762 million as at end September, and to support re-investment needs of SMRT.
Shareholders however will be entitled to the final dividend of 2.5 cents a share for FY16.
The sale will require the approval of minority shareholders.
Credit Suisse has been appointed financial advisor for Temasek, while the Bank of America Merrill Lynch will be advising SMRT in the deal.
This article first appeared in The Edge Singapore Market Report.