As the number of the insurer’s shares held by the public is now below 10%, the counter will be suspended from trading after the offer closes on Jul 12
OCBC and concert parties have garnered 90.16 per cent of the shares in Great Eastern, the bank announced on Monday (Jun 24). However, no delisting is in sight as the lender’s offer for its insurance subsidiary has been deemed not fair but reasonable.
As the number of Great Eastern shares held by the public has now dipped below the 10 per cent threshold, the counter will be suspended from trading after OCBC’s offer closes on Jul 12.
On May 10, OCBC made a voluntary unconditional general offer of S$1.4 billion for the remaining 11.56 per cent stake in Great Eastern that it did not already own, with the aim to delist its insurance arm.
The offer price of S$25.60 per share represents a 36.9 per cent premium over Great Eastern’s last traded price of S$18.70 before the offer announcement. It is, however, at a 30 per cent discount to the insurer’s embedded value per share of S$36.59 as at Dec 31, 2023.
Frontline regulator Singapore Exchange Regulation requires companies seeking to delist to provide their shareholders with an exit offer that is both fair and reasonable.
But the independent financial adviser (IFA) to the privatisation bid has determined that OCBC’s offer is not fair but reasonable. Still, the IFA recommended that minority shareholders accept the offer because no other general offer will be capable of turning unconditional or succeeding, given the bank’s shareholding in the insurer.
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The IFA also noted the risk of a trading suspension, as OCBC needs only 1.56 per cent of total shares before Great Eastern loses its minimum free float of 10 per cent.
After the recommendation was put out, OCBC announced that its offer price was final and that it does not intend to increase it.
The lender’s offer came after a group minority shareholders went public about their concerns over Great Eastern’s depressed share price and continued valuation decline.
Shares of OCBC closed S$0.15 or 1.1 per cent higher at S$14.31, and those of Great Eastern were up S$0.09 or 0.4 per cent to S$25.70 on Monday, before the bank updated the market on its stakes in the insurer.
