Mapletree merger is starting to turn into a saga
On the last day of 2021, $Mapletree PanAsia Com Tr (N2IU.SG)$ Mapletree Commercial Trust (MCT) and $Mapletree NAC Tr (RW0U.SG)$ Mapletree North Asia Commercial Trust (MNACT) announced a merger. The deal wasn't well received and a shareholder activist, Quarz, has been most vocal about it.
Previously I mentioned that MCT and MNACT are of different quality - MCT is like Louis Vuitton while MNACT is probably a Kate Spade.
The trading price has always reflected the difference in quality - MCT has been trading above its book value most of the time while MNACT has been below its book value.
No party seems to be happy about the marriage. On one hand, MCT unitholders might feel that the quality of the asset mix would diminish while MNACT unitholders might think that the offer below the book value was too low.
We can see that the only party who is resolved to make this merger happen is the sponsor, Mapletree Investments. It has since given a third option for MNACT unitholders to consider - an all-cash offer at the same issuance price of S$2.0039 per MCT Unit. The funds would be raised via a private placement with the sponsor promising to scoop up S$2.2 billion worth of MCT units.
I didn't expect the offer to be revised. Technically, the offer price didn't increase but now there is an all-cash offer that might appease some MNACT unitholders.
This new offer might be a response to Quarz's letter to the Monetary Authority of Singapore (MAS). Quarz is finding all ways to get a better deal and pulling in the government has probably added the pressure.
One of the accusation in the letter was about the independence among the related parties in this deal. Mapletree Investment is the sponsor for both MCT and MNACT and it is easy for investors to question their independence.
And Mapletree Investment is 100% owned by Temasek. This becomes a tricky issue as the government would never want to appear as unfair to any minority unitholders and would want this case to be resolved amicably.
Hence, I think that is the reason why the third offer was made. But I don't think Quarz is going to stop making noise simply because the offer price did not increase.
I thought one way to resolve this is to halt the merger but Mapletree seems bent on it.
If this is not handled well, it can be another saga in the making.
Previously I mentioned that MCT and MNACT are of different quality - MCT is like Louis Vuitton while MNACT is probably a Kate Spade.
The trading price has always reflected the difference in quality - MCT has been trading above its book value most of the time while MNACT has been below its book value.
No party seems to be happy about the marriage. On one hand, MCT unitholders might feel that the quality of the asset mix would diminish while MNACT unitholders might think that the offer below the book value was too low.
We can see that the only party who is resolved to make this merger happen is the sponsor, Mapletree Investments. It has since given a third option for MNACT unitholders to consider - an all-cash offer at the same issuance price of S$2.0039 per MCT Unit. The funds would be raised via a private placement with the sponsor promising to scoop up S$2.2 billion worth of MCT units.
I didn't expect the offer to be revised. Technically, the offer price didn't increase but now there is an all-cash offer that might appease some MNACT unitholders.
This new offer might be a response to Quarz's letter to the Monetary Authority of Singapore (MAS). Quarz is finding all ways to get a better deal and pulling in the government has probably added the pressure.
One of the accusation in the letter was about the independence among the related parties in this deal. Mapletree Investment is the sponsor for both MCT and MNACT and it is easy for investors to question their independence.
And Mapletree Investment is 100% owned by Temasek. This becomes a tricky issue as the government would never want to appear as unfair to any minority unitholders and would want this case to be resolved amicably.
Hence, I think that is the reason why the third offer was made. But I don't think Quarz is going to stop making noise simply because the offer price did not increase.
I thought one way to resolve this is to halt the merger but Mapletree seems bent on it.
If this is not handled well, it can be another saga in the making.
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Giovanni Ayala : Hello
amacz : Impressive,
.
12moon : If the rights is $2 for Comm, does it imply current value of Comm is underpriced? Major shareholder of Comm won't simply underwrite the rights with no confidence.
Johnnie Worker : A buy or not