Seriously, WBL is the most under-performing OCBC linked company remaining. And it only takes Straits Trading to be eyeing a bigger stake. Ever wonder why Aberdeen and 3rd Avenue as established fund managers are willing to swap WBL for Straits Trading - mostly likely they have also given up on the volatile earnings history at WBL. With an odd combination of China property development, trading and distribution and electronics manufacturing, WBL's track record is as volatile as its main contributors. OCBC and GE could well be making noise on the miserable cash offer but they could just be whining so that they can get a better cash exit for a non-core asset. WBL is no F&N and hence will not be a game-changer for either OCBC or GE.
OCBC raises concerns over offer for WBL
Key shareholder's doubts could affect Straits Trading's bid
Published on Dec 11, 2012
By Jonathan Kwok
A LOOMING offer for diversified group WBL Corp by The Straits Trading Company could face some hurdles after a key shareholder expressed concerns that the offer may be too low.
OCBC Bank, which holds 5.85 per cent of WBL, yesterday noted that the cash offer of $3.41 a share is below the latest reported WBL net asset value (NAV).
It is also below the average price of WBL shares traded on the Singapore Exchange on Nov23, the trading day before WBL announced a possible bid.
NAV a share was $3.48 on Sept 30, said WBL's latest financial announcement. All trades on Nov 23 were $3.50 to $3.51.
"We further note that the offer price might be reduced for any dividends declared," added OCBC chief financial officer Darren Tan, responding to The Straits Times' queries on the bank's plans for its WBL stake.
OCBC did, however, keep its options open. Mr Tan said the bank "is currently reviewing its options in relation to its shareholding interests in WBL".
The concerns of OCBC could be a setback to Straits Trading's general takeover offer for WBL before it is even formally tabled.
"If a credible large shareholder expresses that the offer is not enough, the market may believe it," said remisier Desmond Leong. "The market may see it as a cue that they may up the offer. So the market may put this offer on hold and wait for a better one."
Straits Trading flagged a possible general offer for WBL on Nov 26. First, it needs to complete the purchase of 64.02 million WBL shares - 23.61 per cent of the firm - from funds managed by Aberdeen Asset Management Asia and Third Avenue Management.
About 68.5 million new Straits Trading shares will be issued to pay for the shares from the funds. The deal needs shareholder approval.
After this, Straits Trading's stake in WBL will rise, triggering a mandatory general offer for the rest of the company.
WBL shareholders will have two options under Straits Trading's proposed offer: 1.07 new Straits Trading shares for every WBL share they hold or selling each WBL share for $3.41 to Straits Trading.
The stock option is the same as the deal given to Aberdeen and Third Avenue.
The cash option is based on the average price of WBL shares on Nov 23.
OCBC did not give a view on the stock option, only the cash option.
The bank has, in recent years, sold stakes in non-banking firms. In July, it agreed to sell stakes in Fraser & Neave and Asia Pacific Breweries to parties linked to Thai tycoon Charoen Sirivadhanabhakdi, sparking bidding wars for those firms.
OCBC also once held a stake in Straits Trading, which it sold.
OCBC's insurance unit, Great Eastern, has 18.07 per cent of WBL. It is unclear if Great Eastern shares its parent's concerns over the Straits Trading offer.
Straits Trading has businesses in resources, hospitality and property. It developed the Rendezvous Grand Hotel, which it wants to sell to Far East group.
WBL's automotive arm is the largest distributor of Volvos in the region, its website says. It also sells brands like Jaguar and Mazda in the region and has businesses in technology, property and engineering.
Shares of WBL and Straits Trading have risen in tandem after the possible offer was flagged on the night of Nov 26.
Straits Trading posted net losses for the third quarter and nine months ended Sept 30, and investors could be hoping that the WBL acquisition would turn around its fortunes.
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