Temasek in $3bn Keppel bid
Offer sparks industry shake-up talk in rig sector, sending shares upwards despite oil price slump
Temasek Holdings is offering to buy control of Singapore conglomerate Keppel Corp. in a S$4.1 billion ($3 billion) deal that could spark consolidation in the domestic rig building sector that is battling the effects of low oil prices.
The announcement, confirming what sources told Reuters on Monday, boosted shares in rig builder Sembcorp Marine by 12 percent on expectations of a likely shake-up in the industry. On Tuesday, shares rose a further 2.2 percent, while shares in parent Sembcorp Industries were steady after rallying 10 percent in the previous session.
Keppel’s offshore and marine unit, and Sembcorp Marine, the two local players, have been hit by a prolonged downturn in the global sector in the last five years as oil prices tumbled.
“There has long been talk of a potential restructuring of businesses under the Keppel Corp. and Sembcorp Industries stable such as the merging of the offshore & marine yards,” said Low Pei Han, senior research analyst at the Bank of Singapore.
Keppel is involved in rig-building, property development, infrastructure and investments
Singapore state investor Temasek said if the deal is completed, it would work with Keppel’s board to undertake a strategic review of its businesses. The deal is its biggest since a $3.7 billion minority stake investment it made in Germany’s Bayer in April 2018.
Temasek already owns 20.5 percent of Keppel and said it would increase that stake to 51 percent, subject to regulator approvals. An indirect fully-owned subsidiary of Temasek will offer S$7.35 in cash for each Keppel share, a premium of nearly 26 percent over Friday’s S$5.84 close.
Keppel’s shares soared 15.7 percent to S$6.77 on Tuesday, below Temasek’s offer of S$7.35. “The partial offer reflects our view that there is inherent long-term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” Tan Chong Lee, president of Temasek’s investment arm, said in the statement.