WiseVest - OCBC to divest its share in Robinsons

Under the guidelines by the Singapore government, the 3 major banks namely UOB, OCBC and DBS are expected to divest their share in non-core assets to below 10% by mid-2006. OCBC is thus expected to sell up to 36% of its shareholdings in Singapore's oldest listed retailer Robinsons Co. Ltd. Four bidders have emerged to acquire this stake, with Indonesian Lippo Group being the front-runner for the bid. Other companies deemed to be interested in the stake includes Tecity Pte. Ltd., an investment holding company controlled by the late Tan Chin Tuan, the retail unit of Indonesian conglomerate Gajah Tunggal, and a party from the United Arab Emirates.

Amongst these 4 contenders, Lippo has emerged as the most convincing contender due to its control of Indonesia's and possibly the region's largest retailer, Matahari. Should Lippo successfully acquire OCBC's stake in Robinsons, it would most probably purchase slightly more than 29% of Robinsons shares, just shy of the 30% threshold for mandatory take-over offer in Singapore. Lippo is expected to purchase the shares at a price of S$7.00 each, a 6% premium over its last traded price of S$6.60. A takeover scenario could also occur whereby the puchaser of the shares offer to buy all existing shares in the market and delist the unit. Most probably in such a scenario, the offer price would carry a premium over the share price. The sale of OCBC's stake in Robinsons would also be seen to benefit shareholders of OCBC as a bonus dividend could be declared from the sale. On top of that, OCBC would also book a net profit and gain from the sale of this stake.