[SINGAPORE] Great Eastern Holdings said that sharing the indicative range of share values determined by its independent financial adviser (IFA) with OCBC did not breach The Singapore Code on Take-overs and Mergers, or the Takeover Code.
This is in response to shareholders’ further questions on Great Eastern’s practices during its exit offer price negotiation with OCBC, after the insurer issued replies to queries from the Securities Investors Association (Singapore), or Sias, and shareholders last Thursday (Jul 3).
In a bourse filing on Saturday, Great Eastern noted questions on whether sharing the indicative range of the shares’ values would amount to “selective disclosure to some and not all shareholders”, and if doing so would invite OCBC to propose a low exit offer price, defeating the IFA’s evaluation. It noted that the conduct of the independent directors was also questioned.
“The rule in the Takeover Code requiring information to be made equally available to all shareholders as nearly as possible at the same time and in the same manner has been cited out of context, particularly since OCBC is the offeror in the context of the current exit offer,” said the insurer in Saturday’s statement.
Great Eastern highlighted that its discussions with OCBC on the exit offer price had already started before the indicative range of values from the IFA was available.
The value range was shared with OCBC in strict confidence and on the understanding that any exit offer price arrived at would have to meet the “fair and reasonable requirement” under Rule 1309 of the Singapore Exchange’s listing manual to support the delisting, said the company.
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It added that sharing the indicative value range with OCBC resulted in the final exit offer price of S$30.15 per share, which was an “improvement” from the range of prices discussed initially.
Prior responses
In the responses to shareholders last Thursday, Great Eastern explained its role in the price negotiations. It noted that IFA Ernst & Young Corporate Finance was requested to perform an analysis on the indicative offer for its shares and determine an indicative range of share values based on the latest available information, including the embedded value of the group as at end-2024.
The insurer shared the indicative value range of S$30.10 to S$37.63 per share with OCBC and had a further series of exchanges with the offeror, before arriving at the exit offer price of S$30.15 per share.
It noted that Ernst & Young Corporate Finance was formally appointed as IFA by the independent directors on Mar 17, 2025.
After valuation analysis, the IFA shared the indicative value range to Great Eastern’s independent directors in early May 2025.
Great Eastern noted that the valuation relied primarily on the embedded value as at end-2024. While it acknowledged that delays in making the exit offer made the figure more than six months old, the embedded value is still the most recent complete data set available.
“Embedded value includes not only the value of new business, but also the sum of the value of in-force business and the value of the adjusted shareholders’ funds,” said Great Eastern. It added that the calculation of embedded value requires a comprehensive assessment using full-year data and actuarial assumptions, which is why this value is formally determined only once a year at the end of each financial year.
The insurer highlighted that although its first-quarter financials were strong, the new business embedded value reflects the present value of projected future profits from new business sold in the year, and is not equivalent to embedded value.
“The latest operational metrics from Q1 2025 show that Great Eastern’s new business embedded value rose 19 per cent to S$148.8 million, while profit attributable to shareholders increased by 13 per cent to S$345.5 million,” it noted, adding that updated half-year financials will be released only on Jul 28, three weeks after its extraordinary general meeting.
The company added that while interim results such as new business embedded value and Q1 profit were considered in context, they are unaudited and were not used to reset the embedded valuation in the middle of the financial year.
“The IFA also considered a range of other factors, including market environment, liquidity conditions and historical trading suspension, before concluding that the exit offer was fair and reasonable.”
Responding to a question from Sias on whether Great Eastern would be attempting to obtain undertakings from any shareholders to vote for the delisting resolution, the company noted the neutral stance of its board, and said it has not and will not be attempting to do so.
Responding to shareholders’ question on the impact to the company’s capital adequacy if a selective capital reduction at 90 per cent of its latest embedded value is conducted, it noted that a selective capital reduction is not in alignment with its capital deployment plans.
“However, purely for illustrative purposes, if a selective capital reduction was undertaken by Great Eastern at the current exit offer price of S$30.15, Great Eastern’s common equity Tier 1 capital would be reduced by almost S$900 million,” it added.
Shareholders also questioned why there was no option for payment in OCBC shares in exchange for the insurer’s, so that its original shareholders could also participate in its growth after the exit.
Great Eastern noted that the overriding objective of its board was to resolve the current trading suspension of the company and comply with the requirements of the listing manual.
“To fulfil the relevant delisting requirements in the listing manual, the conditional exit offer made by OCBC to support the delisting pathway had to include a cash alternative as the default alternative. Hence, OCBC’s support was sought in respect of a cash exit offer.”
It noted that shareholders who wish to participate in OCBC’s growth may use the cash proceeds from the exit offer to acquire OCBC shares in the market.
