CWT Ltd - OCBC Investment 2017-04-10: HNA to buy CWT for S$2.33/share

CWT Ltd - OCBC Investment 2017-04-10: HNA to buy CWT for S$2.33/share CWT LIMITED C14.SI

CWT Ltd - HNA to buy CWT for S$2.33/share

  • Pre-conditions must be fulfilled or waived.
  • Shareholders still entitled to FY16 dividend.
  • Accept the offer.



Offer price represents 12.6% premium to last close 

  • HNA Holding Group Co. Ltd (HNA) yesterday announced that, subject to the fulfilment or waiver of pre-conditions, it will make a voluntary general offer (VGO) to acquire CWT Limited (CWT) for S$2.33/share in cash, valuing CWT at about S$1.4b. 
  • The offer price represents 12.6% premium to last close on Friday of S$2.07. 
  • Also note that CWT shareholders who accept the VGO, if and when made, will be entitled to retain the FY16 proposed final dividend of S$0.03/share payable on 17 May 17. 
  • For the VGO to be made, all pre-conditions must be fulfilled or waived by HNA (if applicable) by 9 Sep 17, which includes anti-trust approvals from various countries (e.g.
  • China, EU, Japan etc.), HNA’s shareholders approval at a general meeting as well as there being no material adverse events.


Undertaking by CWT shareholders with 65% stake 

  • HNA also announced that CWT shareholders with an aggregate of 65.1% stake in CWT have given their irrevocable written undertakings to tender their shares upon HNA making the VGO. This includes the largest shareholder, C&P Holdings (C&P), with 31.9% stake in CWT. 
  • The VGO is also conditional upon HNA receiving acceptances of more than 50% stake in CWT, but will be met with the shareholders’ undertaking to accept.
  • CWT shareholders should also take note that if any dividend, right or other distribution or return of capital, other than the FY16 proposed final dividend is made after yesterday’s announcement, HNA reserves the right to reduce the offer price of S$2.33 by an amount equivalent to such action.


Good opportunity to unlock value 

  • With the offer price representing a 19.5% premium to our FV of S$1.95, we deem the offer by HNA, subject to pre-conditions, attractive and is a good opportunity for shareholders to unlock value. Hence, we recommend shareholders to ACCEPT THE OFFER, once the VGO is made by HNA upon meeting the pre-conditions. 
  • Note that HNA intends to delist CWT once public float falls below 10%.




Eugene Chua OCBC Investment | http://www.ocbcresearch.com/ 2017-04-10
OCBC Investment SGX Stock Analyst Report ACCEPT OFFER Maintain HOLD 1.950 Same 1.950



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