Economists are predicting that the takeover offer for SC Global Developments Ltd., a luxury property developer in Singapore will become even more lucrative in future. On 5th December, the Chief Executive Officer of SC Global Developments, Simon Cheong, offered to take over the company for a price of S$1.80 every share. This makes the overall value of the company to be S$745 million. This is incidentally, the biggest premium ever for an acquisition in the history of Singapore, on record. The premium is actually 61% ahead than the actual stock’s 21-day average. Since the offer was made, the 2nd largest investor of the company, Wheelock & Co. has acquired many shares above the deal price, helping the stock to close at S$1.91 in last week. This indicates that the traders expect Cheong to come up with a bigger deal now.
According to the Singapore based analyst of Malayan Banking, Gregory Yap, Wheelock has made it clear that they are not happy with the current price being offered by Simon Cheong. Therefore, the latest buying spree is nothing but an indication of the same. Yap added that Simon may need to increase the share prices by 39% further. Yap commented that this is not unusual as the luxury unit sales in Singapore have increased a lot over the last few years and volumes are expected to surge by 20% in 2012.
The official representatives of Wheelock or Cheong’s MYK Holdings Pte have declined to make any comment on the prospects of a possible higher bid. Incidentally, Cheong, who used to work as an investment banker earlier, acquired the controls of ANA Hotels Singapore 13 years ago. Later, the same was renamed as SC Global. Famous celebrities such as Yo-Yo Ma and Sean Connery have been featured in the advertisements of its “The Ultimate Living” brand.
SC Global has seen stupendous growth over the last few years, all thanks to the growing wealthy population of Singapore. The profit has increased almost seven times in the last 5 years and the current development projects of the company include The Marq on Paterson Hill and Seven Palms Sentosa Cove. As SC Global has foreign stakeholders, the biggest obstacle for the company has been the Singapore law which compels it to sell the units within 2 years of completion of the development.