OCBC's offer for Great Eastern 'not fair but reasonable', says EY

It advises that shareholders accept offer; closing date extended by 2 weeks

- Prisca Ang

OCBC’s offer to buy the remaining shares of Great Eastern Holdings (GEH) from minority investors is “not fair but reasonable”, said independent financial adviser Ernst & Young Corporate Finance on June 14.

In a separate statement, OCBC said its $25.60 per share offer price is final and will not be increased. The bank also extended the offer’s closing date from June 28 to July 12.

OCBC made a $1.4 billion bid on May 10 to take its insurance arm GEH private following recent shareholder unhappiness over falling returns.

Its voluntary unconditional general offer was for the 11.56 per cent stake in GEH that it did not own.

The offer price represented a 36.9 per cent premium over GEH’s closing price of $18.70 on May 9.

However, it was also 30 per cent lower than GEH’s $36.59 per share embedded value as at the end of the insurer’s last financial year.

OCBC had received acceptances for 1.74 million GEH shares, or 0.37 per cent of the total, as at the end of June 13.

This raises the bank’s stake in GEH to 88.8 per cent, and to 89.01 per cent if the number of shares held by OCBC’s concert parties is included. A concert party refers to a group of investors who buy shares in the same company and then combine them to secure a takeover.

OCBC intends to delist GEH if the free float requirement of 10 per cent is not met, noted EY in a letter to independent directors that advised them on making recommendations to GEH shareholders.

If a delisting happens, GEH shareholders will continue to hold their shares but will no longer be able to trade them.