SINGAPORE: Citing “unhappiness” among minority shareholders of Great Eastern, the Securities Investors Association Singapore ( SIAS ) has posed questions to OCBC about the bank’s privatisation bid for its insurance arm.
The retail investor watchdog on Friday ( Jun 21 ) advised companies that intend to delist in the future to “provide an offer price that is truly” fair and reasonable” to all shareholders, describing the offer as creating a “dilemma” for Great Eastern’s smaller investors.
A RECAP OF OCBC’S BID FOR GREAT EASTERN
OCBC, Singapore’s second- biggest lender, on May 10 announced a S$ 1.4 billion ( US$ 1.03 billion ) offer to buy the 11.56 per cent stake in Great Eastern that it does not own, with the aim to delist the insurer.
The banks made an offer amount of S$ 25.60 per communicate, which it said represents a subscription of 36.9 per share over Great Eastern’s next traded amount of S$ 18.70.
Last year, Ernst &, Young – the independent financial adviser appointed to the bargain – described the words of OCBC’s give as” no fair but acceptable”. It did, however, advise Great Eastern’s independent directors to advise that minority shareholders support the recommendation.
OCBC then stated in a separate statement that its offer price was “final” and that it had extended the offer’s closing date to July 12 as a result.
The bank’s statement “omitted any reference” to the independent financial adviser’s opinion, said SIAS founder- CEO David Gerald on Friday.
He added that the retail investor watchdog has since received “numerous inquiries” from shareholders of Great Eastern” seeking clarity and transparency” from OCBC.
Several long- term shareholders have also previously told SIAS, as well as in the public through media interviews, that” they will not accept ( OCBC’s ) offer because they feel that ( Great Eastern ) has been trading below the true value for the longest time”, said Mr Gerald.
A group of about 125 minority shareholders, led by former remisier Ong Chin Woo, told CNA last week that they are “disappointed” with OCBC’s decision to not budge on its offer price.
As such, Mr Gerald from SIAS hopes that OCBC’s board can “respond adequately” to the concerns of these minority shareholders.
Questions were asked on Friday in a letter addressed to OCBC’s chairman Andrew Lee and the board of directors, including whether the bank had taken the independent financial adviser’s advice into account when it made the decision to decline to raise the offer price.
Mr. Gerald also inquired about the key factors that led to the price of OCBC’s offer, how the bank justified what it perceived as an “unfair” offer, and whether the bank had any feedback from its own shareholders regarding the potential reputational risks associated with this deal.