SATS to mop up remaining SFI shares

SFI to be delisted after compulsory acquisition at 93cents a share

SINGAPORE Food Industries is a step closer to being delisted from the Singapore Exchange, now that its buyer Singapore Airport Terminal Services has accumulated over 90 per cent of its shares.

The mainboard-listed food company yesterday announced that SATS would exercise its right of compulsory acquisition under Section 215(1) of the Companies Act, with its offer price of 93 cents per SFI share.

It will then proceed to delist SFI from the SGX.

SATS advisers Merrill Lynch yesterday announced that the closing date of the offer would be extended from 5.30 pm yesterday to 5.30 pm on March 23. This means minority shareholders who have not accepted the SATS offer to date have two more weeks to do so before trading ceases on the stock.

SFI shares will be suspended at the end of the trading session on March 23.

‘The offeror has no intention to extend the offer beyond 5.30 pm on the revised closing date,’ Merrill Lynch said.

This marks the final chapter of SATS’s takeover of SFI, which started when SATS minority shareholders gave the company the nod to buy a controlling stake in SFI from Temasek Holdings in January.

Almost 70 per cent of minority votes cast at a meeting were in favour of SATS buying 359.7 million SFI ordinary shares, equivalent to a 69.6 per cent stake, for $334.5 million.

The move triggered a general offer for all 157.1 million outstanding SFI shares, which will lift the total purchase price to $509 million.

At 93 cents a share, SATS is buying SFI at a historic price/earnings multiple of 15 times and a price/book ratio of 3.2 times – a point that has drawn criticism from some SATS shareholders who reckon the price is too high in current conditions.

But SATS says a premium has to be paid if it is to take total control of SFI.

SATS believes that buying the food supplier would help it achieve sustainable growth powered by the ‘twin engines’ of airport operations and food services.

It also points out that SFI is a stable business with Singapore government contracts, such as supplying food to the armed forces, and access to the national food security programme.

Following the takeover, SATS is likely to replace the senior management team of SFI with its own team.

SATS now holds 97.22% of SFI

Singapore Airport Terminal Services Limited (SATS) on Monday said as at 5pm on March 6, 2009, it holds 97.22 per cent of Singapore Food Industries Limited (SFI) shares.

Accordingly, SATS has received sufficient acceptances to exercise its right to compulsorily acquire all the remaining shares in SFI at the offer price of S$0.93 per SFI share and delist SFI from the Singapore Exchange.

SATS has extended the closing date of the offer from 5.30 pm on March 9, 2009 to 5.30 pm on March 23, 2009.

SATS has no intention of extending the offer beyond the revised date.

SATS in position to take SFI private

It secures 91.5% of SFI shares; offer closes next Monday

SINGAPORE Airport Terminal Services (SATS) has accumulated enough shares in Singapore Food Industries (SFI) to de-list and privatise it.

At the close of trading on Friday last week, SATS had accumulated 472.67 million of SFI’s 516.79 million shares.

That translates to about 91.5 per cent – enough to go ahead with the de-listing and privatisation of Singapore’s largest integrated food company.

SFI said that in accordance with Rule 1303(1) of the Singapore Exchange listing manual, it will be suspending trading of its shares after the close of the offer.

Based on SATS’s offer price of 93 cents per SFI share, SATS would have spent $439.58 million on the takeover so far.

The development comes about a month after SATS’s minority shareholders gave the company the nod to buy a controlling stake in SFI from Temasek Holdings.

Almost 70 per cent of minority votes cast at a meeting were in favour of SATS buying 359.7 million SFI ordinary shares, equivalent to a 69.6 per cent stake, for $334.5 million.

The move triggered a general offer for all 157.1 million outstanding SFI shares, which, when completed, will lift the total purchase price to $509 million.

With SATS now holding 91.5 per cent of SFI, the remaining minority shareholders with the other 8.5 per cent have – for all practical purposes – little choice but to cash out or face compulsory acquisition of their shares.

According to the SATS offer document, the offer remains open until 5.30pm next Monday.

At 93 cents a share, SATS is buying SFI at a historic price/earnings multiple of 15 times and a price/book ratio of 3.2 times – a point that has drawn criticism from some SATS shareholders who reckon the price is too high in current conditions.

But SATS chief executive Clement Woon believes that a premium has to be paid for total control.

SATS believes that buying the food supplier will help it achieve sustainable growth powered by the ‘twin engines’ of airport operations and food services.

It also points out that SFI is a stable business with Singapore government contracts, such as supplying food to the armed forces, and access to the national food security programme.

Also, through SFI’s presence in Europe and the UK, SATS sees potential to expand into European airline catering. SFI’s UK business has been growing at 14-19 per cent a year.

Observers believe that after the takeover, SATS will replace the senior management team of SFI with its own team.