Friday July 2, 2010
By LEONG HUNG YEE
hungyee@thestar.com.my
Fortis offers S$3.80 per share, passing the ball to Khazanah’s court
PETALING JAYA: India’s Fortis Healthcare Ltd and its major shareholders have made a general offer for Singapore’s Parkway Holdings Ltd at S$3.80 per share cash, slightly over Khazanah Nasional Bhd’s earlier offer of S$3.78 a share.
Even though Fortis’ offer is a mere 0.53% more than Khazanah’s offer, Malvinder Mohan Singh, chairman of Fortis said in a press conference in Singapore yesterday, “I certainly believe our offer is compelling. We are giving shareholders the flexibility to take the decision that is in their best interest.”
Malvinder, who has also become the chairman of Parkway soon after Fortis bought into the Singapore company in March, did not comment on a potential bidding war with Khazanah.
A key difference between Fortis’ offer and Khazanah’s partial offer is that the former is a full general offer, while the latter is only a partial offer, with Khazanah intending to only own 51% of Parkway.
Khazanah currently owns about 23% in Parkway while Fortis has more than 25%.
Fortis’ offer to buy all of Parkway at S$3.80 a share will cost it around S$3.2bil.
The offer was made by RHC Healthcare Pte Ltd, a company jointly owned by RHC Holding Private Ltd, the holding company of Malvinder and his brother Shivider Mohan Singh and Fortis.
Parkway shares were suspended from trading yesterday. Its last traded price was S$3.57.
It remains unclear if Khazanah will make a counter offer for Parkway. The government investment arm said it was evaluating the situation.
Commenting on the rationale to buy Parkway, Malvinder said, “We see ourselves well-positioned for growth. We want to build on our investment (in Parkway) since March this year and we see the combined platform as a way to drive long-term value for the shareholders of both Parkway and Fortis.”
“We see great value in the Parkway brand and believe that Fortis and Parkway together will become a world-class global healthcare organisation,” he said.
Malvinder said the Parkway offer was being financed by a combination of cash and debt, and declined to elaborate.
Macquarie Group Ltd and Royal Bank of Scotland Group Plc are the financial advisors on the offer.
According to data complied by Bloomberg, the offer from Fortis values Parkway at about 27 times estimated 2010 earnings per share. Raffles Medical Group Ltd, Parkway’s biggest Singapore-based competitor, traded at 21 times, it said.
DBS Vickers Securities, in a note yesterday, said that with Fortis’ new offer, the “ball now is in Khazanah’s court to counter (offer). Khazanah had reserved its rights to revise its partial offer into a general offer”.
The Singapore-based research outfit said it was likely that Khazanah would counter offer “as it has highlighted its strategic intent, and Pantai is a crown jewel.”
DBS Vickers also said that “a counter general offer from Khazanah (say at S$3.85 per share) will provide Fortis with a full exit opportunity, netting them a reasonable 8% gain over three months.”
The research house advised its clients to hold on to their Parkway shares and “watch the action”.
It pointed out that Fortis’ offer of S$3.80 values Parkway at S$4.3bil, equating to a price earnings multiple of 33 times FY10 forecast earnings.
“We believe the valuation is attractive enough to accept, provided no counter offer comes along. We believe the small premium could suggest a bidding battle would ensue, but new positions taken would be speculative in nature, in our view,” DBS Vickers said in its note
http://biz.thestar.com.my/news/story.asp?file=/2010/7/2/business/6590978&sec=business
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