Shares of Hiap Hoe have traded up to 80 cents (+8.5 cents) today following news of its takeover offer of sister company SuperBowl.

Ramada_HHRamada Hotel is in the background, sited in Zhongshan Park along Balestier Road. Hotel and park were developed by Hiap Hoe and SuperBowl.
NextInsight file photo
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. 

Goh-Han-PengGoh Han Peng, analyst, OSK-DMG. 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.

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