Great Eastern resumes trading after year-long suspension; closes 10% lower than OCBC’s best offer
[SINGAPORE] Great Eastern Holdings (GEH) resumed trading on Thursday (Aug 21), after a proposed bonus share issue lifted its free float above 10 per cent.
It was suspended from trading in July 2024 after its free float fell below 10 per cent, following a failed takeover bid by parent company OCBC.
As a result of the one-for-one bonus issue, shareholders who, for example, previously held 1,000 shares will now own 2,000 shares.
GEH shares resumed trading on Thursday morning at S$13.21 and closed at S$13.50. A back-of-the-envelope calculation shows that shareholders are better off compared to the last traded price of S$25.80, prior to the suspension and bonus issue.
But compared to OCBC’s S$900 million conditional exit offer of S$30.15 a share, they are worse off by about 10 per cent.
The insurer failed to pass a delisting vote at its extraordinary general meeting last month, which led to the passing of a resolution for a one-for-one bonus issue. It comprised new ordinary shares and newly created Class-C non-voting shares, and shareholders could choose which to receive.
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OCBC opted for the Class-C shares for its bonus entitlement to expand the public float.
Events leading up to the year-long trading suspension
Last May, OCBC made a voluntary unconditional general offer at S$25.60 a share for the remaining 11.56 per cent stake in GEH that it did not already own, with an eye on delisting the insurer.
The offer was deemed “not fair but reasonable” by EY, the independent financial adviser to the transaction.
The privatisation bid failed and left OCBC holding 93.52 per cent of GEH shares, but was short of the 98.87 per cent compulsory acquisition threshold. This milestone would have triggered a compulsory acquisition of GEH shares that OCBC did not already hold.
Subsequently, OCBC, at the request of GEH, made a S$900 million conditional exit offer of S$30.15 per share for the 6.28 per cent stake in GEH it did not own. This new offer was termed “fair and reasonable” by EY.
But this was rejected by shareholders, who then voted in favour of the bonus issue.
Most recently, GEH’s second-quarter earnings were down 11 per cent at S$248.2 million due to a lower contribution from its insurance business.
