Temasek bid to control Keppel Corp for S$4.1 billion
State investor Temasek Holdings offered on Monday to acquire control of Keppel Corp in a $4.1 billion deal that could accelerate consolidation in the rig building sector, that is fighting the effects of low oil prices.
Temasek already owns 20.5% of Keppel and said it would raise its stake to 51%, subject to domestic and foreign regulatory approvals that could take several months.
“The partial offer reflects our view that there is fundamentally long term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” said Tan Chong Lee, president of Temasek International, in the statement.
When the transaction is completed, Temasek will continue to collaborate with the board of Keppel to conduct a strategic business analysis.
Temasek said it had no intention of delisting or privatising Keppel, which would remain on the Singapore Exchange.
An indirect wholly-owned Temasek subsidiary will offer cash of S$7.35 for each Keppel share, a premium of almost 26 per cent over the last traded price of S$5.84.
Keppel’s securities were suspended earlier on Monday for trade. Morgan Stanley is Temasek’s sole financial advisor for the offer.
Keppel is engaged in construction, acquisition of property, services and investments.
The offshore and maritime division of Keppel and the two local players, Sembcorp Maritime, have been battered by a protracted slump in the international market over the past five years as oil prices plummeted.
“There has long been the talk of a possible merger of companies under the Keppel Corp and Sembcorp Industries stable such as the integration of the offshore & marine yards,” said Low Pei Han, Bank of Singapore, senior research analyst.
All Keppel and Sembcorp Marine were among several corporations caught up in the wide-ranging corruption probe called “Car Wash” in Brazil. Keppel’s rig-building unit paid US$ 422 million in late 2017 to resolve charges it paid bribes to secure contracts in Brazil, including with Brazil’s indebted company Sete Brasil.
Keppel and Sembcorp Marine said earlier this month that over long-standing contracts to build drillships and rigs they had reached settlements with Sete Brasil.
“It’s a great time for them to boost their stake, get it past 50 per cent. But then it’s not going to be a simple partial offer because of regulatory requirements,” said Justin Tang, head of Asian research at United First Partners.