Companies intending to delist should provide truly ‘fair and reasonable’ offer prices, says Sias

OCBC’S voluntary unconditional general offer for Great Eastern creates a dilemma for minority shareholders: CEO David Gerald

COMPANIES that intend to delist in the future should provide a truly “fair and reasonable” offer price to all shareholders who have placed their trust in the company, board and management with their hard-earned money, said David Gerald, chief executive of the Securities Investors Association (Singapore), or Sias, in a media statement on Friday (Jun 21).

The statement also included a letter from Gerald addressed to the chairman of OCBC, Andrew Lee, and members of the bank’s board, “conveying the unhappiness of minority shareholders of Great Eastern”.

On May 10, OCBC made a voluntary unconditional general offer of S$1.4 billion for an 11.56 per cent stake of its insurance arm Great Eastern Holdings (GEH), which it does not own, with the aim to delist the insurer.

The offer price of S$25.60 per share represents a 36.9 per cent premium over GEH’S last traded price of S$18.70 before the offer announcement.

As previously reported by The Business Times, this is a 30 per cent discount to GEH’S embedded value per share of S$36.59 as at Dec 31, 2023.

On Jun 14, EY Corporate Finance – the independent financial adviser (IFA) to the deal – said that the offer was “not fair but reasonable”.

However, the IFA advised Great Eastern’s independent directors to recommend that shareholders accept the offer.

In a separate announcement on the same day, OCBC said the offer price at S$25.60 per share was “final” and set the deadline of Jul 12 as the closing date of its offer.

In his media statement, Gerald said that this creates “a dilemma for minority shareholders, where they are not given a choice to make a decision due to the terms of the offer”.

He gave the example where a company has acquired more than 90 per cent share holdings of a listed company, resulting in trading being suspended for a period of time. Shareholders who have not submitted their shares will not be

David Gerald says minority shareholders of Great Eastern Holdings feel that they are now faced with the decision to accept an offer deemed unfair by the IFA, or potentially could find their hard-earned money locked up in an unlisted company for a long period of time.

able to trade, regardless of whether they are agreeable to the offer price or not.

Minority shareholders of GEH feel that they are now faced with the decision to accept an offer deemed unfair by the IFA, or potentially could find their hard-earned money locked up in an unlisted company for a long period of time, he said.

Gerald added that a number of longterm GEH shareholders have said to Sias and publicly “that they will not accept this offer, because they feel that GEH has been trading below the true value for the longest time”.

In his letter to OCBC, Gerald asked if the decision not to increase the offer price considered the IFA’S “not fair but reasonable” opinion. He also questioned the key factors that led to the offer price and whether it reflected the true value and potential of GEH, among other things.

It is hoped by GEH shareholders that OCBC reconsiders its position in light of the IFA’S findings, and in the spirit of fair dealings by a financial institution, he added.

Gerald also said that in order for the financial capital market in Singapore to grow, investors should put their effort looking for good companies to invest in, “rather than to lose hope and trust and spend time on putting up resolutions at extraordinary general meetings”.

He added that Sias would work together with investors and companies for a “win-win situation”.