Mapletree Merger challenged by Quarz
1. Shareholder activist, Quarz Capital, is rallying the rest of the $Mapletree NAC Tr(RW0U.SG$ Mapletree North Asia Commercial Trust (MNACT) unit holders to negotiate for better terms for the merger with $Mapletree PanAsia Com Tr(N2IU.SG$ Mapletree Commercial Trust (MCT) in its latest open letter.
2. The activist still wants the merger to go through but wants the offer price to be higher than MNACT’s NAV of $1.23 (vs $1.1949) and increase the exchange ratio to 0.68 MCT units (vs 0.5963 units) at an issue price of $1.82 (vs $2.0039).
3. While I like more activist presence in Singapore to act as a check and balance against the insiders, I may not agree with all the stances. Not in this case.
4. MCT and MNACT are of different quality. If I may make a crude analogy, MCT is like Louis Vuitton while MNACT is probably a Kate Spade.
5. 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.
6. MNACT’s average PB ratio was 0.87 and the offer is already higher at 0.94. Paying at PB 1 or above doesn’t make sense for MCT unit holders. Is like paying for Kate Spade higher than retail price.
7. MCT (-5.2%) and MNACT (-3.5%) prices have fallen together with the other REITs since the merger was announced. Quarz is saying that MCT issue price should be lowered because of that. But at the same time MNACT offer price has to increase. This is a double standard.
8. Overall I just feel that Quarz is pushing it. I understand it is about fighting for a better offer as a unit holder and they have the right to do it. But the arguments are stretching it this time round.
9. Temasek through its related entities own 38.88% in MNACT while Quarz is not even a substantial unit holder (<5%). MNACT would need 75% approval rate and Temasek isn’t voting. That leaves the battle to the public investors to decide. Quarz wouldn’t want the deal to fall through. They want the offer to be sweetened. A pressure tactic.
10. But I don’t think the offer will be revised because this is not a crucial merger. It is a good-to-have rather than a must-have. And voting down the merger would just mean that MCT and MNACT would continue to trade above and below their book value respectively.
2. The activist still wants the merger to go through but wants the offer price to be higher than MNACT’s NAV of $1.23 (vs $1.1949) and increase the exchange ratio to 0.68 MCT units (vs 0.5963 units) at an issue price of $1.82 (vs $2.0039).
3. While I like more activist presence in Singapore to act as a check and balance against the insiders, I may not agree with all the stances. Not in this case.
4. MCT and MNACT are of different quality. If I may make a crude analogy, MCT is like Louis Vuitton while MNACT is probably a Kate Spade.
5. 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.
6. MNACT’s average PB ratio was 0.87 and the offer is already higher at 0.94. Paying at PB 1 or above doesn’t make sense for MCT unit holders. Is like paying for Kate Spade higher than retail price.
7. MCT (-5.2%) and MNACT (-3.5%) prices have fallen together with the other REITs since the merger was announced. Quarz is saying that MCT issue price should be lowered because of that. But at the same time MNACT offer price has to increase. This is a double standard.
8. Overall I just feel that Quarz is pushing it. I understand it is about fighting for a better offer as a unit holder and they have the right to do it. But the arguments are stretching it this time round.
9. Temasek through its related entities own 38.88% in MNACT while Quarz is not even a substantial unit holder (<5%). MNACT would need 75% approval rate and Temasek isn’t voting. That leaves the battle to the public investors to decide. Quarz wouldn’t want the deal to fall through. They want the offer to be sweetened. A pressure tactic.
10. But I don’t think the offer will be revised because this is not a crucial merger. It is a good-to-have rather than a must-have. And voting down the merger would just mean that MCT and MNACT would continue to trade above and below their book value respectively.
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TaurusX3 : In fact there are MCT holders who don’t want the merger because this will make MCT not a pure Singapore reit.
NIMOH : Brilliant analysis Sir.
monkeylove : My view is this merger might not go through. Buy more MCT as it will go up when the merger fail
Love Simon : Great MCT is better
ph2046 : What’s the update since offer has increase to 1.19xxx