Sinarmas Land minorities should be incensed by lowball offer from its controlling shareholder

[SINGAPORE] Lowball offers are not a rarity in the Singapore market, but the deal presented to minority shareholders of Sinarmas Land last week could be worth watching closely.

For one thing, the offer price of S$0.31 per share was only 12.7 per cent above Sinarmas Land’s last closing price before the deal was announced. In fact, Sinarmas Land shares were trading above the offer price only in January.

The offer price is also a steep 73.9 per cent discount to Sinarmas Land’s net asset value (NAV) as at Jun 30, 2024, of S$1.19 per share. Even if the offer price is eventually hiked by 20 per cent, it would still be a hefty 68.7 per cent below Sinarmas Land’s NAV.

The offeror – a company called Lyon Investments, which is ultimately owned by a trust linked to Indonesia’s Widjaja family – seems to have an interesting justification for its miserly offer price.

The offer announcement on Mar 27 noted that almost all of Sinarmas Land’s businesses are in Indonesia, and held through two Jakarta-listed entities – Bumi Serpong Damai and Puradelta Lestari.