SC Global Developments Ltd., Singapore’s luxury developer, fell after Chief Executive Officer Simon Cheong raised his stake to 90.36 percent, enabling him to delist the company.
The shares lost 0.3 percent to S$1.795 at the close of trading in Singapore. The stock closed below the offer price for the first time. MYK Holdings Pte, the investment vehicle for Cheong and his partners, had offered to take SC Global private for S$1.80 a share on Dec. 5.
The public float outstanding is at 9.64 percent, below the 10 percent threshold to maintain a listing, SC Global said in a statement to the Singapore stock exchange late yesterday. The offer has been extended to Jan. 30 to enable the remaining shareholders to accept the offer. Separately, SC Global’s second-largest investor, Wheelock & Co., also said yesterday it has tendered its shares in the offer.
“Wheelock was holding out for a better price,” said Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte, which advised investors to sell SC Global shares in the offer. “After the new government measures, Wheelock would not have wanted too much variability and uncertainty so it would have decided to monetize its investment.”
Singapore took additional steps last week to discourage speculation in real estate, requiring foreigners to pay an additional 5 percent tax on property purchases and adding levies on second or third homes for Singaporeans.
Cheong’s S$745 million ($609 million) buyout offer is “fair and reasonable,” Prime Partners Corporate Finance Pte, an independent financial adviser, said on Dec. 26, recommending shareholders accept the offer, according to a circular sent to investors.
Traders had been betting the most lucrative takeover offer in Singapore will get even sweeter for the luxury property developer. Since the offer, Wheelock bought shares above the deal price.
As a company with foreign shareholders, SC Global faces fines for failing to sell units within two years of completing developments. That law is designed to ensure land in Singapore, an island state with a population of more than 5 million, isn’t hoarded for speculation.
The stock rose to the highest in almost five years on Dec. 17 after Wheelock said it bought 1.07 million shares at S$1.81, exceeding Cheong’s offer price. Since then it added more shares taking its holding in SC Global to 17.9 percent. Wheelock, also a developer, said it named Goldman Sachs Group Inc. as its financial adviser in relation to Cheong’s offer.
Wheelock shares climbed 1.1 percent to S$1.93 in Singapore.
Amid fluctuating sales, SC Global reported losses in three of the four most recent quarters, and earnings are expected to fall 79 percent in 2012, analysts’ estimates compiled by Bloomberg show.
When Cheong made the offer, he said that a private company would have more flexibility if it didn’t have to report results on a quarterly basis and said that SC Global hasn’t tapped capital markets in at least six years.