Temasek offers to buy control of Keppel
TEMASEK, WHICH ALREADY OWNS ABOUT ONE-FIFTH OF KEPPEL, OFFERED TO BUY AN ADDITIONAL 30.6% STAKE FOR ABOUT $3 BN
SINGAPORE: Singapore’s Temasek Holdings Pte plans to take control of Keppel Corp. for about S$4 billion ($3 billion) and undertake a review of the oil-rig builder’s business that could involve a board shakeup.
The state-backed investor, which already owns about onefifth of Keppel, offered to buy an additional 30.6% stake at S$7.35 a share, according to a statement on Monday. That’s 26% higher than what Singapore-based Keppel traded at before its shares were hal t e d, pending t he announcement.
Becoming the majority owner of one of the world’s biggest oil-rig makers would be seemingly at odds with Temasek’s preference to steer away from fossil fuels; the firm decided against investing in Aramco’s initial public offering (IPO) in part over environmental concerns. But taking over Keppel could open a variety of profitable merger, acquisition and divestment options that may help improve the builder’s financial and environmental sustainability amid falling revenue and rising capital demands.
“The partial offer reflects our view that there’s inherent longterm value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” Temasek International president Tan Chong Lee said in a statement.
SEMBCORP MARINE Temasek’s offer for the additional interest in Keppel could make a merger between Keppel’s offshore and marine unit and rival Sembcorp Marine Ltd easier, Joel Ng, an analyst at KGI Securities Co. said by phone. It would allow the consolidation of Singapore’s two largest shipyards to proceed, he added in a note to clients.
“Temasek is already a major s hareholder of Sembcorp Marine, and after this, they will become a major shareholder of Keppel making any merger easier,” Ng said. Sembcorp Marine rose as much as 12%, while its parent Sembcorp Industries Ltd jumped as much as 9.6%.
Temasek said it plans to keep Keppel traded on the Singapore stock exchange.
Keppel also has businesses involved in real estate and infrastructure, and the entire company is subject to a “comprehensive strategic review” with the objective of creating “sustainable value” for shareholders. That shakeup could lead to new directors on its board, Temasek said in its statement.
“The S$7.35 offer made by Temasek is a sign of where it sees value and potential in Keppel’s main segments, real estate and offshore and marine, especially given the fluctuation in the oil price recently,” Justin Tang, head of Asian research at United First Partners, said. “Sembcorp Marine shares are rising—it’s a view on the sector,” he said.