On June 24, Oversea-Chinese Banking Corporation (OCBC) announced it had received a 1.48 million shares or 0.31% of acceptances from shareholders of Great Eastern Holdings G07 (GEH) on June 24, taking the banking group's total stake to 90.16%. After the close of the offer, under Rule 1105 of the Listing Manual, the Singapore Exchange may suspend GEH until it is satisfied that at least 10% of the total number of shares is held by at least 500 shareholders who are members of the public.
Additionally, under Rule 1303(1) of the Listing Manual, the SGX is likely to suspend trading of GEH when the percentage of shares in public hands falls below 10%, as stated in an announcement by OCBC and posted by GEH on SGXnet.
On May 14, OCBC made an offer of $25.60 for the 11.56% of GEH it did not own. On June 14, GEH's independent financial adviser (IFA) Ernst & Young stated that OCBC's offer was "not fair but reasonable" and advised the independent directors of GEH to recommend to shareholders to accept the offer.
Also on June 14, OCBC announced that its $25.60 offer price is final, and it extended the period for valid acceptances till July 12. It appears increasingly unlikely that OCBC is going to raise the offer price after July 12 with an exit offer as some market watchers including media outlets have suggested.
Although OCBC has stated its intention to delist GEH, the understanding is, that the banking group is not likely to delist GEH at any cost. OCBC's board have a duty of care to its own 125,000-plus shareholders. Acquisitions need to be accretive.
Interestingly, two conditions need to be met for a stock to be delisted from the Singapore Exchange S68 . The first condition that has not been met is that the IFA has to recommend that the offer is fair and reasonable.
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The second condition is that 75% of the 11.56% of GEH's minority shareholders need to accept the offer. This would mean that OCBC is required to own 97.17% of GEH to delist it. Given that some old time shareholders and the Wong family have indicated they do not plan to accept the offer, OCBC may not be able to get to 97.17%.
Should these two conditions not be met, GEH may have to issue new shares to restore the free float via a private placement. A general rule for the pricing of the new shares is that it should not be 10% lower than the last traded price of GEH. However, some market observers are now suggesting that the regulator may provide a bit of wriggle room on the 10% discount.
GEH will announce its 1HFY2024 results on July 31, and closed at $25.70 on June 24.
