Singapore Press Holdings Limited (“SPH”) announced Monday that Keppel Pegasus Pte. Ltd., a wholly owned subsidiary of Keppel Corporation Limited has proposed to acquire all the shares of SPH post restructuring of the media business through a scheme of arrangement (the “Scheme”).

Earlier in May, SPH had said that it will be transferring its media business to a not-for-profit entity amidst the ongoing challenge of falling advertising revenue.
Pursuant to the Scheme, for each share in SPH, a shareholder will receive a total consideration of S$2.099 per share, comprising:

• cash of S$0.668 per share,
• (ii) 0.596 Keppel REIT units valued at S$0.715 per share1 , and
• (iii) 0.782 SPH REIT units valued at S$0.716 per share1 from a distribution in-specie (“DIS”) by SPH.

This represents a 39.9% premium to the last traded price of S$1.500 per share before the strategic review of SPH’s businesses was announced on 30 March 2021 (“Strategic Review”) as well as an 11.6% premium to the last traded price of S$1.880 per share on 30 July 2021 and a 21.4% premium to the 3-month volume weighted average price of S$1.729 per share.

Ng Yat Chung, Chief Executive Officer of SPH, said: “The outcome is the result of a strategic review process that has taken place over many months. We took the first step with the Media Restructuring to ensure a sustainable future for the media business, while removing its losses from SPH. The next step was a thorough process to unlock and maximise value for all shareholders for the remaining company. With the privatisation offer from Keppel, shareholders now have an opportunity to realise the value of their SPH shares at a premium of 39.9% to the last traded price before the Strategic Review was announced.”

The Strategic Review was announced on 30 March 2021 with a view to unlock and maximise shareholder value.

The first step in the Strategic Review was the proposed restructuring of SPH’s media business. On 6 May 2021, SPH announced that it would transfer relevant subsidiaries, employees, News Centre and Print Centre along with their respective leaseholds, as well as all related intellectual property and information technology assets (“Media Restructuring”) to a wholly-owned subsidiary, SPH Media Holdings Pte Ltd (“SPH Media”).

Under the Media Restructuring process, SPH Media would be transferred to a public company limited by guarantee (“CLG”) for a nominal sum. Following the Media Restructuring, SPH would no longer be subject to any funding requirements related to the media business.

In addition, the restrictions under the Newspaper and Printing Presses Act2 (“Newspaper Act”), including the 5% shareholder cap restriction and issue of management shares, would be lifted. This increases the range of options available to SPH post media restructuring.

The Board carried out a comprehensive review of the various strategic options, including maintaining the status quo, monetisation of certain assets, a partial sale or privatisation of SPH post media restructuring.

With an objective to maximise value and minimise disruption for shareholders, the Board concluded that the privatisation of the entire company would be the preferred solution. It derives a better valuation outcome for all shareholders where a control premium is paid for the entire company. Also, it avoids a situation where prime SPH assets are cherry-picked, 3 leaving SPH with its existing debt and the risk of being unable to monetise its remaining assets.

A thorough and orderly two-stage process was conducted to solicit and evaluate proposals from a number of potentially interested parties. The process was overseen by a Steering Committee consisting of Board members, in consultation with Credit Suisse and Allen & Gledhill LLP, SPH’s financial and legal advisors, respectively.

The final closed bids were evaluated based on price, terms and conditions, financing certainty, regulatory approvals, transaction structure and execution risk. At the end of the process, the final proposal from Keppel to privatise SPH was selected after careful evaluation, based on the various criteria.

The Scheme represents an opportunity for shareholders to realise their stake at a significant premium to SPH’s share price prior to the announcement of the Strategic Review. Shareholders will also receive any final dividend that may be declared by the Board for Financial Year 2021 (the “Potential Final Dividend”)

The receipt of SPH REIT Units and Keppel REIT Units would allow shareholders to participate in the recovery upside of the retail and commercial sectors at attractive dividend yields.

The Scheme is subject to approval by SPH and Keppel shareholders. In addition, it is also subject to other conditions, including regulatory approvals, and no Material Adverse Effect occurring.

Upon the Scheme being effective, SPH will be delisted and be a wholly-owned subsidiary of Keppel. Keppel will hold a remaining stake in SPH REIT and Keppel REIT of approximately 20% each.

The Scheme is contingent on the successful completion of the Media Restructuring announced on 6 May 2021. The transfer of the media assets to the CLG is subject to SPH shareholders’ approval at an EGM expected to be convened in August or September 2021. Should the Media Restructuring be approved at the EGM, the completion of the Media Restructuring, including conversion of the management shares to ordinary shares, is expected to occur by December 2021.

It is expected that the privatisation by Keppel will be concluded soon after completion of the Media Restructuring.