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| Snapshot of closing price of GLP on 14 July 2017 after announcement of takeover by Chinese consortium. |
Read the News Report by Reuters if you still don't know what happened on Friday.
FAQs
1. Is the deal 100% confirmed?
Yes and no. No 3rd party can approach GLP for another takeover deal now. The deal will be subjected to approval at Court of Singapore and vote of majority at a scheme meeting to be called later (TBA - not so soon). As a layman investor, I would believe that the deal will go through with high probability. There are no info/data available to me that suggest otherwise. The only risks i can think of would be government interventions, for whatever weird reasons, or a dirty deal by the buyers, i.e. last minute cancel deal for all kinds of reasons. However, that is highly speculative if I was to take those risks too seriously. In addition, GIC (major shareholder of GLP with over 30% control) has an irrevocable undertaking to vote in favour of the scheme of arrangements.
2. When will privatisation offer be completed?
April 2018, which is 9 months from now. It is possible to occur earlier, I hear people speculating 4 to 5 months. Shareholders will receive payment of S$3.38/share within 7 days from completion of transaction.
Yes and no. No 3rd party can approach GLP for another takeover deal now. The deal will be subjected to approval at Court of Singapore and vote of majority at a scheme meeting to be called later (TBA - not so soon). As a layman investor, I would believe that the deal will go through with high probability. There are no info/data available to me that suggest otherwise. The only risks i can think of would be government interventions, for whatever weird reasons, or a dirty deal by the buyers, i.e. last minute cancel deal for all kinds of reasons. However, that is highly speculative if I was to take those risks too seriously. In addition, GIC (major shareholder of GLP with over 30% control) has an irrevocable undertaking to vote in favour of the scheme of arrangements.
2. When will privatisation offer be completed?
April 2018, which is 9 months from now. It is possible to occur earlier, I hear people speculating 4 to 5 months. Shareholders will receive payment of S$3.38/share within 7 days from completion of transaction.
3. Why is the stock trading below the offer price of $3.380?
Time value of money, not hard to figure that out from here. The risk of a failed privatisation arrangement, for whatever reasons, will price in a discount too.
Time value of money, not hard to figure that out from here. The risk of a failed privatisation arrangement, for whatever reasons, will price in a discount too.
What can we do now?
If shareholder before 14 Jul,
if wanna forgo $0.14/share, →because u earned enough $$
sell.
else hold.else,
if wanna earn 4.2% ROI over max period of 9 months,
buy at 3.300.
How was the $0.14/share and 4.2% derived in the decision making algorithm above?
Assume a live market trading price of 3.300, do your own sensitivity analysis if you need. I did a rough one, the 4.2% yield did not waver much when the market price swung around 3.300.
$3.38 + $0.06 - $3.30 = $0.14
(OfferPrice + Dividends - LivePrice) = Premium of investment / arbitrage.
Note that the $0.06/share dividends will go Ex-Div on 3 August 2017.
0.14 / 3.30 * 100% = 4.2%
(InvestmentPremium / Cost * 100% = ROI%)
Hope this is helpful for people who are new to scheme of arrangement.
Disclosure: The author was not vested in shares of GLP before 14 July 2017.
Important Disclaimer: Personal opinions only, not providing financial advice. Please seek advice from professional stockbroker, bank manager or financial advisor if you need.
