Shares of Hiap Hoe have traded up to 80 cents (+8.5 cents) today following news of its takeover offer of sister company SuperBowl.
HIAP HOE has launched a pre-conditional general offer for Superbowl Holdings with a cash offer of SGD0.75/share, representing a 15% premium over the last traded price.
Both companies are currently majority-owned by the founding Teo family and the deal constitutes an interested party transaction subject to approval by independent shareholders of Hiap Hoe.
Superbowl’s key property assets include:
1) a 50% stake in Zhongshan Park, an integrated hotel-cum-commercial complex along Balestier Road with attributable value of SGD351m,
2) a portfolio of strata-titled retail properties across 5 shopping malls worth some SGD110m,
3) a 40% stake in the completed high-end residential project Treasures on Balmoral.
We estimate an RNAV of SGD410m or SGD1.26/share for Superbowl.
The offer from Hiap Hoe thus priced Superbowl at a steep discount of 40% to RNAV.
The combined Hiap Hoe-Superbowl entity, meanwhile, will have SGD800m of investment properties and SGD600m of residential inventory with RNAV of ~SGD1bn, raising its profile in the listed property space league.
We favour the combination of the two companies, which will bring the largest asset within the group, the SGD702m Zhongshan Park complex under a single corporate entity, as well as save on dual-listing expenses should Hiap Hoe succeed in delisting Superbowl.
Assuming a successful closure, we estimate a 22% accretion to Hiap Hoe’s RNAV, from SGD1.40/share to SGD1.71/share.
We apply a wider discount of 45% to RNAV given the possibility of equity fund-raising by Hiap Hoe post-acquisition to bring down its gearing, and derive a TP of SGD0.94. BUY maintained.