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.