Singapore conglomerate Keppel Corp has offered to buy over and privatise Singapore Press Holdings (SPH) in a deal worth S$3.4 billion.

This deal will exclude the media arm of SPH.

The S$3.4 billion deal includes S$1.2 billion worth of SPH Reit units which will be distributed to SPH's shareholders. Keppel's share of the deal is S$2.2 billion.

SPH announced earlier in May this year that the media business of SPH will be carved out into a not-for-profit entity.

SPH to be delisted from SGX if deal goes through

This new deal, if approved by shareholders of both parties, will see SPH becoming a wholly-owned subsidiary of Keppel and will be delisted from the Singapore stock exchange, according to a joint announcement by Keppel Corp and SPH on Monday (Aug. 2).

SPH also said that the deal will be contingent on the successful completion of the media restructuring.

Keppel would then have access to SPH's real estate businesses, which include various malls, residential properties, nursing homes and student accommodations, according to Reuters.

SPH's media release also stated that if the deal goes through, its shareholders will receive a total consideration of S$2.099 per share, which comprises of cash of S$0.668 a share, 0.782 SPH Reit units valued at S$0.716 per share and 0.596 Keppel REIT units valued at S$0.715 per share.

This value of S$2.099 represents an 11.6 per cent premium to the closing price of SPH stock on Friday (Jul. 30), according to Reuters.

Keppel Corp, Keppel Reit, SPH and SPH Reit had earlier called for trading halts in lieu of this announcement, according to the Business Times (BT).

Keppel chosen because of "better valuation outcome for shareholders"

The Keppel deal is a "preferred solution" and will enable a "better valuation outcome for all shareholders where a control premium is paid for the entire company", said Board members in the media release.

"Also, it avoids a situation where prime SPH assets are cherry-picked, leaving SPH with its existing debt and the risk of being unable to monetise its remaining assets."

The inclusion of SPH and Keppel Reits for shareholders will allow them "to participate in the recovery upside of the retail and commercial sectors at attractive dividend yields", according to the media release.

Keppel's bid to acquire SPH is in line with its overall strategy to accelerate its expansion into the student and senior accommodations industry, BT reports.

Top photo by Syahindah Ishak