Sinarmas Land minorities should be incensed by lowball offer from its controlling shareholder.

The Deal: A Steep Discount to Net Asset Value

A Rare Opportunity in the Singapore Market

[SINGAPORE] Lowball offers are not a rarity in the Singapore market, but the deal presented to minority shareholders of Sinarmas Land last week could be worth watching closely.

A Limited Premium

For one thing, the offer price of S$0.31 per share was only 12.7 per cent above Sinarmas Land’s last closing price before the deal was announced. In fact, Sinarmas Land shares were trading above the offer price only in January.

A Steep Discount to Net Asset Value

The offer price is also a steep 73.9 per cent discount to Sinarmas Land’s net asset value (NAV) as at Jun 30, 2024, of S$1.19 per share. Even if the offer price is eventually hiked by 20 per cent, it would still be a hefty 68.7 per cent below Sinarmas Land’s NAV.

The Offeror’s Justification

The offeror – a company called Lyon Investments, which is ultimately owned by a trust linked to Indonesia’s Widjaja family – seems to have an interesting justification for its miserly offer price.

The Focus on Indonesia

The offer announcement on Mar 27 noted that almost all of Sinarmas Land’s businesses are in Indonesia, and held through two Jakarta-listed entities – Bumi Serpong Damai and Puradelta Lestari.

Conclusion

The deal presented to minority shareholders of Sinarmas Land is an interesting development in the Singapore market, with the offer price being significantly lower than the company’s net asset value. While the offeror’s justification for its offer price is unclear, it will be worth watching to see if the offer price is eventually hiked and if minority shareholders will accept the deal.

Frequently Asked Questions

Q: What is the offer price for Sinarmas Land shares?
A: The offer price is S$0.31 per share.

Q: How much is the offer price above Sinarmas Land’s last closing price?
A: The offer price is 12.7 per cent above Sinarmas Land’s last closing price.

Q: What is the discount to Sinarmas Land’s net asset value?
A: The offer price is a 73.9 per cent discount to Sinarmas Land’s net asset value.

Q: Who is the offeror?
A: The offeror is Lyon Investments, which is ultimately owned by a trust linked to Indonesia’s Widjaja family.