OCBC will take insurer Great Eastern private only if the “conditions are acceptable and in the interests of OCBC and its shareholders”, the bank said in response to questions from the Securities Investors Association (Singapore), or Sias.
In a statement via the Singapore Exchange on Thursday (Jun 27), OCBC cleared the air on whether the bank would proceed to delist Great Eastern at all costs. “We have to be prudent and calibrated in our approach, while striking a balance between cost and returns.”
Since the offer has been deemed by the independent financial adviser (IFA) as not fair but reasonable on Jun 14, there has been speculation on whether OCBC would raise its offer price of S$25.60 per share in order to delist the insurer. Following the IFA’s advice, the bank has said the offer price is final.
OCBC said that Great Eastern’s listed status does “not affect” the close relationship between the bank and its subsidiary, given their synergistic relationship, and is part of the bank’s “One Group” strategy to provide a full suite of integrated solutions for its customers.
The Singapore Exchange Regulation (SGX RegCo) requires companies seeking to delist to provide their shareholders with an exit offer that is both fair and reasonable. This means the insurer is unlikely to be allowed to delist in conjunction with the current offer, even if it loses its public float and trading in its shares is suspended.
OCBC and concert parties have garnered 90.24 per cent of the shares in Great Eastern as at 6 pm on Jun 26. As the number of the insurer’s shares held by the public has dipped below the 10 per cent threshold, the counter will be suspended from trading after OCBC’s offer closes on Jul 12.
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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.
Great Eastern shares closed S$0.01 or 0.04 per cent lower at S$25.64 while OCBC was up S$0.11 or 0.8 per cent at S$14.51 on Thursday, before the responses to Sias were published.
