[SINGAPORE] OCBC has made a S$0.9 billion conditional exit offer at $30.15 per share for the 6.28 per cent stake in Great Eastern it does not own, in a bid to delist the insurer.
The offer, which OCBC said on Friday (Jun 6) was made “at the request of Great Eastern”, will resolve the latter’s 11-month suspension in share trading, while “providing its shareholders an exit at a fair and reasonable price”.
Independent financial adviser (IFA) to the deal Ernst and Young said this offer is fair and reasonable.
The new offer implies a price to embedded value ratio (P/EV) of 0.8 times; a price to net asset value ratio (P/NAV) of 1.6 times; and a price to earnings (P/E) ratio of 14.3 times of the insurer’s 2024 results.
It is also a premium to the median P/EV, P/NAV and P/E of comparable companies presented in the IFA letter for the previous offer.
The offer comes months after OCBC first made a voluntary unconditional general offer of S$1.4 billion for the remaining 11.56 per cent stake in Great Eastern that it did not already own, with the aim to delist the insurer.
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OCBC had earlier said its previous offer was final.
OCBC’s new exit offer is conditional upon at least 75 per cent of the total number of issued shares held by Great Eastern shareholders vote in favour of a delisting resolution, which the insurer will table at an extraordinary general meeting.
OCBC said it will not be able to vote on the resolution.
If the delisting resolution is passed, Great Eastern will be delisted from the Singapore Exchange (SGX) and shareholders who accept the exit offer will be paid, while those who do not accept the offer will remain as shareholders owning shares in the unlisted insurer.
1-for-1 bonus issue
But if the delisting resolution is not passed, the exit offer will lapse and Great Eastern will propose a resolution to satisfy the free float requirement.
This includes a 1-for-1 bonus issue resolution comprising new ordinary shares – which will be listed and carry voting rights – and newly-created Class C non-voting shares – which will not be listed and have no voting rights.
These shares will be issued at no consideration from shareholders, and will be entitled to the same dividends. All shareholders will receive the bonus shares unless they elect to receive the class c non-voting shares.
OCBC said it will be able to vote on the bonus issue resolution, and intends to vote in favour of it and opt to receive the Class C non-voting shares.
This will dilute the lender’s own shareholding of voting shares in Great Eastern to 88.19 per cent, but keep its 93.72 per cent stake in the economic interests in the insurer since the non-voting shares rank equally with all ordinary shares.
OCBC said its exit offer price is final and it has no intention of launching another offer in the foreseeable future.
OCBC chief executive Helen Wong said the lender has “never wavered in our strategic intention to delist Great Eastern”.
The new offer is “made to avail to Great Eastern shareholders the opportunity to exit the stock after an 11-month suspension in share trading”, she said.
“We have carefully considered the decision. We are therefore making a fair and reasonable offer, to comply with listing rules, to support Great Eastern’s proposal to delist,” she added.
OCBC’s original offer was deemed “not fair but reasonable” by the then independent financial adviser for the deal.
At the close of that offer in July 2024, the bank held 93.52 per cent of the insurer, falling short of the shareholding it needed to delist Great Eastern, or to compulsorily acquire the rest of the shares.
Great Eastern was given an extension by the SGX until until Jun 8 to announce its finalised proposal to comply with listing rules.
