an old article
Why is Temasek Holdings paying $2.82 BILLION to buy back all the shares of Neptune Orient Line, when it had declared to divest itself from all ownership of viable GLC operations ?
If one is to relook at all the reported outflow of funds from Temasek Holdings for 2004 alone, one can only wonder if there is a bottomless depth in Temasek's pocket:
29 January 2004 - Temasek pay US$45million for 7.5% stake in India's Supply Chain Manager.
18 February 2004 - Temasek pay S$43.7million for an increase of 0.56% stake in India's ICICI Bank, raising its shareholdings from 6.72% to 7.28%.
3 March 2004 - Temasek pay US$765.8million for 5% stake in Malaysia's Telekoms.
(No follow-up during March 2004 to August 2004, anyone who did ? )
Temasek's NOL offer 'fair but not compelling'
HSBC advises investors to keep holdings if they are confident of long-term prospects but says those wishing to sell could do so if the market price was higher
By Nicholas Fang
TEMASEK Holdings' $2.82-billion cash offer for all the shares of Neptune Orient Lines (NOL) that it does not already own is 'fair but not compelling', said NOL independent financial adviser HSBC.
In a circular issued to shareholders yesterday, HSBC said that shareholders who wished to realise their investment in NOL immediately should consider selling their shares on the open market if they can obtain a higher price than Temasek's offer price.
However, shareholders who are 'confident of the long-term prospects of the group' were advised to retain their shares and not accept the offer.
Temasek Holdings stunned the market earlier last month when it announced its offer for NOL at $2.80 a share.
The Singapore investment company announced the offer after buying NOL shares on the open market and pushing its stake past the 30 per cent mark that triggers a mandatory takeover offer under corporate laws.
HSBC said that factors in favour of the Temasek offer included the fact that the offer price of $2.80 per share is higher than any adjusted daily closing price in the period since NOL's acquisition of its APL liner arm in 1997 up to the offer announcement date.
'The premium of the offer price over the historical share price of NOL in the observation period we have selected is in line with that of selected tender offer transactions in Singapore,' HSBC said.
However, it also noted that the adjusted daily closing price for NOL in the period since the date the offer was announced up to the latest practicable date has consistently exceeded the offer price.
The shares have closed above Temasek's $2.80 bid price every day after the offer was announced.
HSBC also said Temasek's offer valued the 36-year-old shipping line at a price-to-earnings multiple which was below the mean and median of comparable companies.
It recommended that shareholders who wished to realise all or part of their investment in NOL now, but were unable to obtain a price higher than the offer price on the open market, could consider accepting Temasek's offer.
A Temasek spokesman said yesterday: 'The opinion in the NOL circular has no new and material information on the company.
'We recommend that all NOL shareholders carefully read the independent financial adviser's opinion and the NOL board's recommendation based on the appropriate investment horizons.
'We wish to reiterate that our offer of $2.80 a share is an all-cash, firm offer, which closes on Sept 15 at 3.30pm.'
HSBC noted that NOL had said that, should APL be reclassified by the United States government as a controlled carrier if Temasek's stake in NOL edged above 50 per cent, the financial impact on NOL is unlikely to be material.
It said that NOL had told them that in the event of a loss of business due to such a reclassification, the financial impact would be immaterial as assets involved could be redeployed to serve other customers or trades.
NOL shares ended yesterday three cents lower at $2.82 per share with 3.95 million shares changing hands.
This news report was published in the Straits Times dated 3 September 2004, which will be archived after three days.