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Great Eastern minority shareholders seeking better offer from OCBC
OCBC Bank, which holds more than 88 per cent of Great Eastern, said earlier in May it is seeking to delist the stock.
SINGAPORE &ndash A group of minority holders of Great Eastern Holdings are resisting the $1.4 billion takeover bid from OCBC Bank, opening a new front in a longstanding fight between shareholder activists and Singapore&rsquo s second-largest bank.
The price of $25.60 per share is well above the stock&rsquo s price before the announcement. Some share holders, however, point to a 30 per cent discount against Great Eastern&rsquo s embedded value, a metric that has been used to value insurance firms elsewhere. By that measure, it is half the valuation the bank used in its last attempt to take full ownership of the company.
OCBC, which holds more than 88 per cent of Great Eastern, said earlier in May that it is seeking to delist the stock.
&ldquo We are now caught between a rock and a hard place,&rdquo said former remisier Ong Chin Woo, who owns Great Eastern and OCBC shares.
Since 2021, he has been a vocal spokesman for a group that now comprises more than 100 minority shareholders. &ldquo If OCBC has no other choices, at least give us a fair exit offer,&rdquo he added.
An OCBC spokesperson defended the number, saying it reflects a roughly 40 per cent premium over the price in both the month and the year before the announcement, as well as in multiples of the insurer&rsquo s book value and other financial metrics.
Morgan Stanley banking analysts said the offer is &ldquo high&rdquo , will contribute positively to earnings at OCBC, and make management of the combined entity easier.
The bank has steadily built its 88.44 per cent stake in the 116-year-old insurer, which operates in Singapore, Malaysia and Indonesia. Over the past 10 years, Great Eastern has contributed an average of about $700 million a year in net income to OCBC, equivalent to about 15 per cent of OCBC&rsquo s annual profit, according to the bank.
Over the past decade till the end of 2023, OCBC shares have risen more than 30 per cent, while Great Eastern&rsquo s have dropped 1 per cent. The insurer&rsquo s minority shareholders have been lobbying for years for higher dividends and better liquidity.
They have also objected to using OCBC stock to reward Great Eastern executives like chief executive Khor Hock Seng, whose long-term incentives have been paid in OCBC shares.
Great Eastern told investors in April that it has taken steps to strengthen capital management and improve dividend payouts but that many of the factors that affect share prices are beyond its control.
As for the executive compensation, the insurer said the structure helps to foster the &ldquo One OCBC Group&rdquo spirit with its holding company, and using Great Eastern shares would impact the stock&rsquo s liquid ity.
OCBC&rsquo s current offer ascribes zero value to Great Eastern&rsquo s future underwriting and to its agency network, said Maybank Securities analyst Thilan Wickramasinghe.
&ldquo There are risks that OCBC might have to make a higher offer in order to narrow that discount gap,&rdquo he added.
Some members of Singapore&rsquo s old est business clans are invested in the outcome. Companies linked to businessman Lee Thor Seng, part of the clan that co-founded OCBC, have a stake.
Mr Wong Hong Sun, whose grandfather was chairman of Great Eastern for close to 20 years, holds more than three million shares.
&ldquo Even if I am not sentimental, I won&rsquo t sell,&rdquo he said. &ldquo Half price is no way.&rdquo
Great Eastern has appointed EY as an independent financial adviser to assess the merit of OCBC&rsquo s offer and make a recommendation to shareholders. OCBC will dispatch the offer document to Great Eastern shareholders no later than the end of May, and the offer opens for at least 28 days, according to the current timeline.
&ldquo Normally, you&rsquo d pay a substantial premium to take a majority stake of a company,&rdquo Bloomberg Intelligence analyst Steven Lam said.
But listed insurance firms are rare in South-east Asia, making it difficult to find a comparable benchmark.
&ldquo This time, we are dealing with a minority stake of 11.56 per cent,&rdquo he added.
https://www.straitstimes.com/business/great-eastern-minority-shareholders-seeking-better-offer-from-ocbc
Great Eastern minority shareholders seeking better offer from OCBC
Key consideration is your entry price after GO was announced.
Not advocating to chase now. Lots of opportunities to buy since GO was announced at lower levels.
Again, don' t think many will dare buy to bet for revised offer at this level.
Question then is who is buying ? Go figure out
Not advocating to chase now. Lots of opportunities to buy since GO was announced at lower levels.
Again, don' t think many will dare buy to bet for revised offer at this level.
Question then is who is buying ? Go figure out
any GE shareholder rec' d the offer docs yet?
Certainly those buying now are buying at a higher price and therefore have more to lose.
The other issue is that if everyone thinks like SmallSmall and OCBC believes this then they will never increase the offer price because they know at the end of the day minorities will fold and accept the current price. OCBC will only make a substantively higher offer price if minorities are genuinely willing to accept the offer failing and for the price to go back down to (say) $18. Remember OCBC will always have the last look on whether the threshold is reached and and the last call as to whether they raise the offer price or whether to let the bid fail. It is very difficult to bluff them.
The other issue is that if everyone thinks like SmallSmall and OCBC believes this then they will never increase the offer price because they know at the end of the day minorities will fold and accept the current price. OCBC will only make a substantively higher offer price if minorities are genuinely willing to accept the offer failing and for the price to go back down to (say) $18. Remember OCBC will always have the last look on whether the threshold is reached and and the last call as to whether they raise the offer price or whether to let the bid fail. It is very difficult to bluff them.
MrBear12 ( Date: 26-May-2024 07:26) Posted:
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Risky for those buying later
SmallSmall ( Date: 25-May-2024 22:01) Posted:
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Of course if you are betting for revised offer ($28 in my wild guess) you do not want to take the risk by letting the offer lapse. You hold till last 2 days before closing date. If by then still no revision you have to sell in open market or tender in. If there is a revision it will come when they realise the take up rate is low.
MrBear12 ( Date: 25-May-2024 18:09) Posted:
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Agree. But anyone holding this share for decades will demand higher, that is for certain. Let them be.
Alignment ( Date: 25-May-2024 17:58) Posted:
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Aside from considering whether OCBC would pay more if the deal would fail if it did not, another factor to consider is if it did pay more how much more would it pay? The share price now is somewhat above the offer price so it may be a good idea to sell now rather than take the risk of OCBC not offering more. Given the undisturbed price of GE before the offer was about S$18, shareholders potentially face a 30% decline in price if the deal fails. One obviously needs to access the probability of this happening, and the probability of all the other possible outcomes, to weigh up the optimal course of action.
If everyone plays your cards right, we will get a revised offer I believe. Just don?t be overly excited and submit the acceptance. Can always do it online near the closing date.
If few tender their offers after say 2 weeks, chances of a revised offer would be high. Of course keep an eye on the price action. Leakages of sensitive information always precedes the actual action. Unavoidable.
If few tender their offers after say 2 weeks, chances of a revised offer would be high. Of course keep an eye on the price action. Leakages of sensitive information always precedes the actual action. Unavoidable.
If GE cannot privatisation what price it will drop back ?
Godwinlow ( Date: 22-May-2024 10:26) Posted:
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Great Easten shareholders pls sign the petition to OCBC
https://chng.it/kzhB2XhGvD
Do take a look and help circulate to OCBC and GEH shareholders. Thanks
https://chng.it/kzhB2XhGvD
Do take a look and help circulate to OCBC and GEH shareholders. Thanks
Bought some this week, so vested, waiting, hoping. Some numbers to consider but please DYODD.
| Great Eastern Holdings | ||
| Total Mkt Issue | 473,319,069 | 100% |
| OCBC | 418,586,759 | 88.436% |
| Others | 54,732,310 | 11.564% |
| To Privatize n Game Over | 7,400,403 | 1.564% |
| OCBC Current Offer | $25.6 |
| Embedded Value | $36.59 |
| Discount to EV | 30% |
| IF 25% to EV | $27.44 |
| IF 20% to EV | $29.27 |
| IF 15% to EV | $31.10 |
| IF 10% to EV | $32.93 |
https://www.theedgesingapore.com/news/ma/great-easterns-20th-anniversary-puzzler
A short extract
Despite trading at a premium to some of its listed peers, OCBC?s offer price at 0.7 times embedded value makes GEH the cheapest acquisition in the past 20 years. The second cheapest acquisition in the past 20 years is by HSBC of AXA at 0.8 times embedded value in 2021.
Some 20 years ago, OCBC paid almost twice the current valuation, at 1.3 times embedded value in 2004 and 1.5 times embedded value in 2006. While the 2004 offer comprised a share swap and a selective capital reduction, 2006?s offer was an all-cash deal.
A short extract
Despite trading at a premium to some of its listed peers, OCBC?s offer price at 0.7 times embedded value makes GEH the cheapest acquisition in the past 20 years. The second cheapest acquisition in the past 20 years is by HSBC of AXA at 0.8 times embedded value in 2021.
Some 20 years ago, OCBC paid almost twice the current valuation, at 1.3 times embedded value in 2004 and 1.5 times embedded value in 2006. While the 2004 offer comprised a share swap and a selective capital reduction, 2006?s offer was an all-cash deal.
BT Mark to Market: SGX RegCo focuses on shareholder value (Ep 43) (businesstimes.com.sg)
If GEH were to revalue all their real estates assets, how much more would it be worth?
If GEH were to revalue all their real estates assets, how much more would it be worth?
Past few trading days shares traded had been average worth 20 millions worth of shares. Share price Above OCBC offer price. It' s goes to show big players are in. Betting OCBC will up its price, while absorbing those who want to sell great eastern shares to themselves. And OCBC, Jp Morgan haven' t been able to buy any shares due to the share price is above its offer price.
https://www.smartkarma.com/insights/great-eastern-holdings-ge-sp-ocbc-s-offer-needs-a-bump-to-achieve-privatisation-ambitions?utm_source=tiger_community
Great Eastern Holdings (GE SP): OCBC&rsquo s Offer Needs a Bump to Achieve Privatisation Ambitions
Wolf Money(My views on Great Eastern offer)
Great Eastern Holdings(extract from end May portfolio update)
First of all before I go further, the views I shared are my alone. It doesn&rsquo t reflect anybody views and it is also not to undermine the good work of the independent financial advisors which are been task to assess the fairness of this voluntary unconditional general offer by OCBC. Kindly do take my commentary with a pinch of salt given my vested interest in GEH. My view shouldn&rsquo t be taken as cardinal truth on what you should do with your GEH shares. Kindly do your own due diligence and seek professional advice.
https://lonewolfinvestor.blogspot.com/2024/05/wolf-moneymy-views-on-great-eastern.html
https://www.youtube.com/watch?v=d1qYNGBX-eI& t=518s
This is the link from financial commentator, Dr wealth. Not financial advise but after reading this video, i feel its a lowball offer.
And why is GE management holding OCBC share? feel something is not right.
Watch the video to find out.
This is the link from financial commentator, Dr wealth. Not financial advise but after reading this video, i feel its a lowball offer.
And why is GE management holding OCBC share? feel something is not right.
Watch the video to find out.
Don' t think there is a GE option. Tell me there is one. Where got market for GE option ?
MrBear12 ( Date: 12-May-2024 13:09) Posted:
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