By P.R. Venkat and Yongchang Chin
SINGAPORE--Keppel Corp. has made an offer to acquire Singapore Press Holdings Ltd. for 2.2 billion Singapore dollars (US$1.62 billion), a move by the conglomerate to build its property portfolio.
Keppel Corp., which has business interests spanning rig building to infrastructure, is making the offer through a combination of cash and units of Keppel REIT, the company said Monday.
The deal consideration will comprise S$1.08 billion of cash and S$1.17 billion worth of Keppel REIT units.
The implied value of SPH is S$2.099 per share, a 11.6% premium to its last traded price on July 30. Trade of shares of Keppel Corp., Keppel REIT and SPH have been halted.
"This acquisition will accelerate Keppel's Vision 2030 plans to be an integrated business providing solutions for sustainable urbanization, with an asset management arm to fund the group's growth and provide a platform for capital recycling," Keppel Corp. said.
The company, which expects to complete the deal by the end of the year, is planning to delist SPH from the Singapore stock exchange.
"The outcome is the result of a strategic review process that has taken place over many months," SPH Chief Executive Ng Yat Chung said.
Credit Suisse is acting as financial adviser to SPH, while JPMorgan is advising Keppel Corp. on the deal.
Keppel Corp.'s Chief Executive Loh Chin Hua said in a press briefing Monday that the deal was expected to produce a pro-forma earnings per share gain of S$0.175 per share and the deal is unlikely to raised its gearing ratio above 1.0 times, from 0.85 times currently.
Mr. Loh said it planned to de-leverage in the short-term by monetizing assets. This could mean selling some non-core assets as well as securitizing SPH's student accommodation portfolio.
He cited the S$1.15 billion it received from its Vision 2030 monetization program from October 2020 to June 2021 as indication the firm had sufficient debt headroom.
Keppel's acquisition of SPH's property business also marks its first foray into the student-accommodation market. SPH has student accommodation assets in 18 cities across the U.K. and Germany, Keppel said, valuing SPH's student-accommodation portfolio at S$1.4 billion.
It expects these to do well, noting applications for places at U.K. universities rose 8% for the upcoming academic year.
SPH's portfolio of shopping malls are also attractive, Keppel said, given the expected recovery of the retail sector as vaccination rates rise and with borders likely to begin reopening soon.
Write to Yongchang Chin at yongchang.chin@wsj.com and P.R. Venkat at venkat.pr@wsj.com
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