Temasek in $3bn Keppel bid

Temasek’s attempt to take control of Keppel comes as the Singapore state investor continues to consolidate its hold on the Asian maritime industry. (Reuters)
Updated 22 October 2019

Temasek in $3bn Keppel bid

  • Offer sparks industry shake-up talk in rig sector, sending shares upwards despite oil price slump

SINGAPORE: Temasek Holdings is offering to buy control of Singapore conglomerate Keppel Corp. in a S$4.1 billion ($3 billion) deal that could spark consolidation in the domestic rig building sector that is battling the effects of low oil prices.

The announcement, confirming what sources told Reuters on Monday, boosted shares in rig builder Sembcorp Marine by 12 percent on expectations of a likely shake-up in the industry.

On Tuesday, shares rose a further 2.2 percent, while shares in parent Sembcorp Industries were steady after rallying 10 percent in the previous session.

Keppel’s offshore and marine unit, and Sembcorp Marine, the two local players, have been hit by a prolonged downturn in the global sector in the last five years as oil prices tumbled.

“There has long been talk of a potential restructuring of businesses under the Keppel Corp. and Sembcorp Industries stable such as the merging of the offshore & marine yards,” said Low Pei Han, senior research analyst at the Bank of Singapore. 

Keppel is involved in rig-building, property development, infrastructure and investments

Singapore state investor Temasek said if the deal is completed, it would work with Keppel’s board to undertake a strategic review of its businesses. The deal is its biggest since a $3.7 billion minority stake investment it made in Germany’s Bayer in April 2018.

Temasek already owns 20.5 percent of Keppel and said it would increase that stake to 51 percent, subject to regulator approvals.

An indirect fully-owned subsidiary of Temasek will offer S$7.35 in cash for each Keppel share, a premium of nearly 26 percent over Friday’s S$5.84 close. 

Keppel’s shares soared 15.7 percent to S$6.77 on Tuesday, below Temasek’s offer of S$7.35.

“The partial offer reflects our view that there is inherent long-term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” Tan Chong Lee, president of Temasek’s investment arm, said in the statement.

 


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.