Great Eastern Holdings’ minority shareholders are contesting a S$1.4bn ($1.03bn) takeover bid from Oversea-Chinese Banking Corporation (OCBC), citing the offer as undervalued, reported Bloomberg.
The proposed price of S$25.6 per share is seen as a 30% discount against the insurer’s embedded value, a common valuation metric in the industry.
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Considering that measure, it is only half of the valuation the bank made when it made its previous bid to acquire the entire business.
OCBC, owning over 88% of Great Eastern, aims to delist the company, a move that has sparked concern among investors.
Ong Chin Woo, a shareholder in both Great Eastern and OCBC, said:
“We are now caught between a rock and a hard place.”
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By GlobalDataRepresenting a group of over one hundred minority shareholders, Woo has been advocating for a more equitable exit offer since 2021.
An OCBC spokesperson has defended the offer, highlighting its 40% premium over the past month and year, alongside other financial benchmarks.
The 116-year-old insurer, contributing significantly to OCBC’s profits, has faced shareholder pressure for increased dividends and liquidity.
Great Eastern’s executive compensation, paid in OCBC shares, has also been a point of contention.
Great Eastern has informed investors of initiatives to enhance capital management and dividends, though it acknowledges that many factors influencing share prices are external.
The insurer maintains that the current compensation structure promotes unity within the OCBC Group.
Notable business figures with stakes in the outcome include Lee Thor Seng and Wong Hong Sun, who remains firm in not selling his shares at “half price.”
EY has been appointed as an independent financial adviser to evaluate OCBC’s offer and advise Great Eastern shareholders.
The offer document is set to be distributed by the end of May, with a minimum offer period of 28 days.
