Oversea-Chinese Banking Corporation Limited (OCBC) O39 has announced a $1.4 billion voluntary unconditional general offer for the 11.56% stake in Great Eastern Holdings
According to a May 10 statement, this will strengthen OCBC’s business pillars of banking, wealth management and insurance, and optimise its capital to enhance shareholder returns.
The offer price of $25.60 represents a 36.9% premium over GEH’s last traded price of $18.70 and premiums of 38.6%, 40.0% and 42.4% over the one-month, three-month and 12-month periods up to and including the last trading date of May 9.
With the offer, OCBC intends to increase its investment in GEH beyond its current stake of 88.44%, with a view to delist the insurer from the Singapore Exchange S68 .
The announcement accompanied OCBC's results for 1QFY2024 ended March 31. The bank reported net profit of $1.98 billion for the quarter, 22% higher q-o-q and 5% higher y-o-y.
Shareholders have long called for OCBC to privatise the separately-listed GEH. In June 2023, OCBC bought 2.3 million GEH shares for nearly $40 million, which took its stake up from 87.9% to its current 88.4%.
At OCBC's AGM on April 30, the bank’s chairman Andrew Lee did not give a clear indication of OCBC's plans, saying: “Since 2006, the free float of Great Eastern is lesser than 20%. OCBC is not in the business of providing liquidity for another company. We have our own strategic agendas… We have no direct interest in stimulating Great Eastern liquidity or share price.”
OCBC group CEO Helen Wong says the offer is a “natural progression” of OCBC’s strategy. “We have moved intentionally to build up a strong wealth management franchise by hiring the best people and instituting best practices and processes, and raising our investment in Great Eastern.”
She adds: “We have been looking at opportunities to best use our capital and believe the offer allows us to deploy our resources into a key business that is expected to be earnings accretive to OCBC.”
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Shares in GEH closed 37.5% higher at $25.72 on May 10. The close price — a five-year high — is above OCBC's offer price of $25.60.
GEH had called for a trading halt before the market opened on May 10, which was lifted after the midday break at 1pm. The insurer’s shares reached an intra-day high of $26.
OCBC’s shares, meanwhile, closed 1.51% higher at $14.12. The bank’s shares reached an intra-day high of $14.22.
