mr funny
18-07-11, 18:47
http://www.businesstimes.com.sg/sub/companies/story/0,4574,447618-1310759940,00.html?
Published July 15, 2011
Curious case of some uninformed Allgreen investors
By EMILYN YAP
A FEW investors in Allgreen Properties may have unwittingly got themselves into a no-win deal by buying shares in the group at $1.60 apiece or more, when it has become almost certain that the group will be bought over at $1.60 a share.
In May, Malaysian tycoon Robert Kuok offered to take his Singapore property unit Allgreen private. Brookvale Investments, linked to the Kuok group, made a voluntary unconditional cash offer of $1.60 a share, valuing Allgreen at $2.54 billion.
Since then, Brookvale has gained a significant stake in Allgreen. On July 7, it already owned, controlled or agreed to acquire around 90.69 per cent of the shares in issue. With its concert parties, Brookvale held a 90.87 per cent interest.
In crossing the 90 per cent mark, Brookvale became entitled to - and will - exercise its right to compulsorily acquire all the shares it does not own at $1.60 apiece.
Market observers have pointed out an anomaly: even after the July 7 announcement, some Allgreen shares were changing hands in the stock market at $1.60 each or more.
From July 8 to yesterday, over six million shares were traded at $1.60 to $1.605 each, according to Bloomberg data. Yesterday, the counter closed at $1.60, up by half a cent.
Investors who bought into Allgreen at above $1.60 a share would face losses when Brookvale compulsorily acquires the company. Even for those who paid exactly $1.60 a share, there are still brokerage commissions to cover.
Market watchers BT spoke to found it hard to explain this curious case. Perhaps some investors were just unaware of how far the privatisation bid had progressed, they said.
In some cases, during the offer period when it is still unclear if the takeover would go through, some investors may purchase shares above the offer price in anticipation of a higher competing offer to come, said Kim Eng analyst Wilson Liew. But once the 90 per cent mark is crossed, no informed investor would pay more, he said.
On Wednesday, Brookvale and its concert parties held around 92.75 per cent of Allgreen. As less than 10 per cent of the issued shares are in public hands, the Singapore Exchange will suspend trading in Allgreen from the close of the offer on July 26. Brookvale will delist the company.
Published July 15, 2011
Curious case of some uninformed Allgreen investors
By EMILYN YAP
A FEW investors in Allgreen Properties may have unwittingly got themselves into a no-win deal by buying shares in the group at $1.60 apiece or more, when it has become almost certain that the group will be bought over at $1.60 a share.
In May, Malaysian tycoon Robert Kuok offered to take his Singapore property unit Allgreen private. Brookvale Investments, linked to the Kuok group, made a voluntary unconditional cash offer of $1.60 a share, valuing Allgreen at $2.54 billion.
Since then, Brookvale has gained a significant stake in Allgreen. On July 7, it already owned, controlled or agreed to acquire around 90.69 per cent of the shares in issue. With its concert parties, Brookvale held a 90.87 per cent interest.
In crossing the 90 per cent mark, Brookvale became entitled to - and will - exercise its right to compulsorily acquire all the shares it does not own at $1.60 apiece.
Market observers have pointed out an anomaly: even after the July 7 announcement, some Allgreen shares were changing hands in the stock market at $1.60 each or more.
From July 8 to yesterday, over six million shares were traded at $1.60 to $1.605 each, according to Bloomberg data. Yesterday, the counter closed at $1.60, up by half a cent.
Investors who bought into Allgreen at above $1.60 a share would face losses when Brookvale compulsorily acquires the company. Even for those who paid exactly $1.60 a share, there are still brokerage commissions to cover.
Market watchers BT spoke to found it hard to explain this curious case. Perhaps some investors were just unaware of how far the privatisation bid had progressed, they said.
In some cases, during the offer period when it is still unclear if the takeover would go through, some investors may purchase shares above the offer price in anticipation of a higher competing offer to come, said Kim Eng analyst Wilson Liew. But once the 90 per cent mark is crossed, no informed investor would pay more, he said.
On Wednesday, Brookvale and its concert parties held around 92.75 per cent of Allgreen. As less than 10 per cent of the issued shares are in public hands, the Singapore Exchange will suspend trading in Allgreen from the close of the offer on July 26. Brookvale will delist the company.