Citing “unhappiness” among minority shareholders of Great Eastern, the Securities Investors Association Singapore (SIAS) has posed questions to OCBC about the bank’s privatisation bid for its insurance arm.
Describing the offer as having created a “dilemma” for Great Eastern’s smaller investors, the retail investor watchdog on Friday (Jun 21) urged companies that intend to delist in future to “provide an offer price which is truly ‘fair and reasonable’ to all shareholders”.
A RECAP OF OCBC’S BID FOR GREAT EASTERN
OCBC, Singapore’s second-biggest lender, on May 10 announced a S$1.4 billion (US$1.03 billion) offer to buy the 11.56 per cent stake in Great Eastern that it does not own, with the aim to delist the insurer.
The bank made an offer price of S$25.60 per share, which it said represents a premium of 36.9 per cent over Great Eastern’s last traded price of S$18.70.
Last week, Ernst & Young – the independent financial adviser appointed to the deal – described the terms of OCBC’s offer as “not fair but reasonable”. However, it advised Great Eastern’s independent directors to recommend that minority shareholders accept the offer.
Following that, OCBC said in a separate statement that its offer price was “final” and extended the closing date of its offer to Jul 12.
The bank’s statement “omitted any reference” to the independent financial adviser’s opinion, said SIAS founder-CEO David Gerald on Friday.
He added that the retail investor watchdog has since received “numerous inquiries” from shareholders of Great Eastern “seeking clarity and transparency” from OCBC.
Several long-term shareholders have also previously told SIAS, as well as in the public through media interviews, that “they will not accept (OCBC’s) offer because they feel that (Great Eastern) has been trading below the true value for the longest time”, said Mr Gerald.
A group of about 125 minority shareholders, led by former remisier Ong Chin Woo, told CNA last week that they are “disappointed” with OCBC’s decision to not budge on its offer price.
As such, Mr Gerald from SIAS hopes that OCBC’s board can “respond adequately” to the concerns of these minority shareholders.
Questions included in a letter addressed to OCBC’s chairman Andrew Lee and members of the bank’s board on Friday include if the bank had considered the independent financial adviser’s opinion when it decided not to raise its offer price.
Mr Gerald also asked for the key factors that led OCBC to its offer price, how the bank justifies what is perceived as an “unfair” offer and if the bank has received feedback from its own shareholders regarding the potential reputational risks arising from this deal.
CNA
