Singapore real estate, infrastructure, and marine conglomerate Keppel Corp is set to acquire the non-media businesses of Singapore Press Holdings (SPH), and privatise the business in a S$3.4 billion ($2.51 billion) deal.
Keppel’s offer to buy out minority shareholders in SPH comes three months after the latter hived off its media business — comprising the daily broadsheets The Straits Times and The Business Times, magazines, radio, billboards, and book publishing — into a not-for-profit entity in a restructuring.
SPH’s non-media businesses span property development; a portfolio of purpose-built student accommodation in the UK and Germany; a portfolio of aged care homes in Singapore and Japan; and a mall in Singapore.
It also has a 66% stake in the separately-listed SPH Real Estate Investment Trust, which holds interests in a portfolio of malls in Singapore, and Australia.
SPH also has in its stable a portfolio of digital businesses, including a majority stake held with Keppel in the telco M1; and education providers MindChamps and Han Culture and Education Group.
For the first half of its financial year ended March 30, 2021, SPH’s media business contributed a paltry 2.2% to the group’s pre-tax profit. The bulk, or S$86.3 million, came from the retail and commercial businesses. Student accommodation accounted for S$22.4 million, or 16%.
SPH also noted in its 1H2021 financial report that it holds a 0.1% stake in Korean e-commerce company Coupang, which listed on the NYSE in March. At current market valuations, SPH’s stake in Coupang, which was acquired at $3.9 million, is worth roughly $60 million.
Taken as a whole, Keppel’s offer for the businesses represents a 40% premium to the price that SPH was trading at before the strategic review of its businesses was announced on March 30.
After the transaction, SPH will be delisted and become a wholly-owned subsidiary under Keppel. Keppel will hold approximately a 20% stake each in the separately-listed SPH REIT and Keppel REIT.
SPH’s portfolio of student accommodation and aged care facilities will likely augment Keppel’s real estate businesses. Keppel’s property development unit accounts for the bulk of its pre-tax profit, or S$720 million for the financial year 2020. Its energy and environment unit, which holds its rigbuilding business, posted a pre-tax loss of S$1.25 billion for the same period.
In a statement, SPH said that it had evaluated offers “from a number of potentially interested parties” before the offer from Keppel was selected.
The offer is still subject to approval by shareholders in SPH and Keppel, and regulators.
Meanwhile, Keppel itself has undergone a review of its businesses — namely the restructuring of its once-core offshore and marine unit following a slump in its rig-building business. In June, Keppel and its key rival Sembcorp Marine, both majority-owned by Temasek Holdings, said they are exploring a merger of their rig-building businesses.