Takeover fever grips Singapore bourse

Takeover fever grips Singapore bourse

SINGAPORE (Reuter): Takeover fever is sweeping the Singapore stock market following a spate of purchases of small local firms by Indonesian entrepreneurs, dealers said yesterday.

With a stagnant market in blue chips, many traders are trying to spot the next takeover target from among the scores of second- line securities listed on the Stock Exchange of Singapore Dealing and Automated Quotation System (SESDAQ).

"They are looking for a company that could be a cheap entree into the Singapore market," said H.G. Asia (Singapore) managing director Stephen Davies. "Small firms are ideal targets."

Much of the trading in small firms is driven by rumors of a takeover or stake-building by third parties, often Indonesians. The rumors are often wrong, but if they prove correct investors acting on them can make a fortune.

"The market is dominated by speculation by inhouse traders, who are gambling on the next big play," said the head of sales at a local bank. "Some days, they account for most of the volume."

The latest focus on Indonesian buyers began in June with rumors of a takeover of property group Amcol Holdings.

After weeks of speculation, heavy trading, and a rise in its shares to Singapore $4.40 (US$3.14) from S$3.00 (S$2.14), Indonesian businessman Henry Pribadi finally said he was taking a stake in the company.

Pribadi is now Amcol's biggest shareholder with 16 percent.

Just after Pribadi bought into Amcol, another Singapore firm, ice-cream franchise ABR Holdings, saw its shares soar on reports of a takeover by Indonesian Johanes Kotjo.

Active trading saw ABR's price rise to a peak of S$1.96 (US$1.40) from 60 Singapore cents (42.86 U.S. cents) in June, before Kotjo gained control in early August.

Then, two weeks ago, Indonesian President Soeharto's son Bambang Trihadmodjo led a takeover of Singapore construction group L&M Group.

Analysts say small Singapore firms are an attractive target for Indonesian investors who want a secure foreign base nearby.

"Singapore firms are a safe haven," said Yang Sy Jian, head of economic research at Kay Hian James Capel. "They are based in a strong currency, the country is stable and it's next door."

And providing it is cheap enough, what the company being taken over actually does is almost irrelevant.

"The business can be changed," said a local dealer. "It is a cynical move... An investor who wants to increase the value of his own unlisted company, simply buys a small listed Singapore stock and injects his own business into it."

"I've counted at least 17 SESDAQ stocks you could pick up cheaply," said one dealer, who declined to be identified.

"All have a small number of shares worth between 50 Singapore cents (35.71 U.S. cents) and S$1.60 (US$1.14) and a controlling stake could be bought for under S$20 million (US$14.29 million)."

"Of course, you have to get the approval of the main shareholders for the deal to work, otherwise it can be quite expensive to take over even a small company," said Davies.