S'pore abuzz over Temasek's NOL bid
S'pore abuzz over Temasek's NOL bid
Jake Lloyd-Smith, Associated Press, Singapore
The Singapore government's powerful investment arm sent waves
through the city-state's stock market on Wednesday after it made
a surprise S$2.82 billion (US$1.6 billion) cash bid for the
world's seventh largest shipping group.
The offer by Temasek Holdings, revealed late on Tuesday,
triggered both a surge in the share price for Neptune Orient
Lines, or NOL, and a debate among analysts about Temasek's
motives for the swoop.
The opaque investment group, a unit of the Finance Ministry,
has been concentrating on acquisitions outside its tiny home
market around the region in recent months, while trimming stakes
in some local companies. The bid for NOL appears to run counter
to this trend.
Temasek on Tuesday raised its stake in NOL from 27 percent to
30.14 percent. Under Singapore's takeover code, a shareholder
that buys more than 30 percent of a listed company is required to
make an offer for all of its shares.
Temasek said it was offering to buy all NOL's stock at S$2.80
apiece.
"We were interested to increase our shareholding above 30
percent," Margaret Lui, Temasek's Managing Director of Strategic
Development said in a statement.
The bid "is an all cash, firm offer, conditional upon us
receiving" at least half the shares, Lui added.
The company's shares closed at S$2.70 on Tuesday, spiked up to
a high of S$2.95 in early trade on Wednesday, and then eased
slightly to trade at S$2.88 at midday.
Temasek - headed Ho Ching, wife of leader-to-be Lee Hsien
Loong - is the most powerful corporate player in the wealthy
city-state, and its stable of well-known companies was used to
drive Singapore's industrialization in the 1970s.
Today, it maintains extensive holdings in Singapore
Telecommunications, the phone group; DBS Group, the region's
largest bank; Singapore Airlines, the country's flag-carrier and
many others.
Temasek doesn't publish comprehensive annual accounts covering
all its investments, although many of its individual listed
companies do detail their performances.
OCBC Securities said in a note to clients that Temasek's
rationale for the offer is "unclear at this stage," highlighting
the confusion that the move is causing.
"We consider ourselves an Asian investment company and we
actively manage our investments," a Temasek spokesman was quoted
as saying on Wednesday in the Straits Times newspaper.
NOL made headlines of its own last week, reporting its second-
quarter net profit rose almost threefold to $186 million on the
back of higher demand and better freight rates.
The rosy result for the quarter to June 25 comes as the global
economy has been picking up steam, and it beat analysts' average
forecasts for a profit of $174 million.
NOL charges its customers in U.S. dollars and, like many
players in the industry, reports its results in that currency.