Minority holders should carefully assess Paragon bid

Minority shareholders of Paragon Reit will soon have to vote for or against an offer by Cuscaden Peak Investments to buy them out and take the real estate investment trust (Reit) private.

-  Kang Wan Chern

Cuscaden Peak Investments formerly Singapore Press Holdings (SPH) and a major shareholder of Paragon Reit- on Feb 11 proposed to buy the Reit for $2.78 billion, or 98 cents per unit in cash, under a trust scheme of arrangement.

Unlike a general takeover, a trust scheme of arrangement is subject to court approval to ensure fairness and transparency.

RHB analysts point out that there is a good chance of a successful deal unless a potential competitive bid emerges, given the decent premium offered. In the absence of a competing offer, Mr Gerald Wong of research platform Beansprout said that investors should accept the current offer as it is above precedent privatisations and above the trading price of Paragon Reit for the past two years.

The offer price of 98 cents is a 7.1 per cent premium over the Reit's net asset value (NAV) and 34.2 per cent higher than the current market price of similar Singapore retail Reits. It is also 8.3 per cent above the average price Paragon Reit has traded at over the past five years.

A final dividend of 2.33 cents per unit for the second half of 2024 was also announced. Units of Paragon Reit closed at 99 cents on Feb 11, up 11.2 per cent, after it resumed trading following a trading halt.