The report “Keppel Corp extends deadline for S$3.2b property unit takeover” (March 13) stated that KPMG’s assessment of the offer as “not fair but reasonable” may have “added to the confusion”.
KPMG Corporate Finance, which is advising Keppel Land’s independent directors, said the offer prices (S$4.38 to S$4.60 per share) were below the developer’s sum-of-the-parts estimated valuation range of S$6.58 to S$6.79 per share.
Keppel Corp had stated it would not revise its offer price, leaving small investors little choice, even though the price gap is about 33 per cent. “Not fair but reasonable” sounds therefore like “take it or leave it” to the little man.
Another “not fair but reasonable” matter, one that affects many Singaporeans, is the Lease Buyback Scheme for retirees to make up for the inadequacy of their Central Provident Fund savings.
Most Singaporeans’ major asset is their Housing and Development Board (HDB) flat and they can sell back part of their lease tenure. The response rate to the scheme, however, is reported to be poor. The key reason is plain economics.
Take, for instance, a flat with a remaining 70-year lease and market value of S$323,000. The HDB would buy back 40 years of the lease for S$138,000, which is less than the simple division of 40 over 70, or S$185,000.
The HDB’s figure is derived by accounting for depreciation over time, whereas property owners believe that their asset should appreciate over time. As with Keppel Land’s retail investors, the choice is “take it or leave it”.
To a cash-tight, desperate or ignorant recipient, it would have been a “not fair but reasonable” offer, or injustice justified by confusing accounting methods or terminology.
The relevant enterprises should sit up and rework/improve their offers if the feedback is “not fair”, whether or not they think the offer is reasonable.
KPMG Corporate Finance, which is advising Keppel Land’s independent directors, said the offer prices (S$4.38 to S$4.60 per share) were below the developer’s sum-of-the-parts estimated valuation range of S$6.58 to S$6.79 per share.
Keppel Corp had stated it would not revise its offer price, leaving small investors little choice, even though the price gap is about 33 per cent. “Not fair but reasonable” sounds therefore like “take it or leave it” to the little man.
Another “not fair but reasonable” matter, one that affects many Singaporeans, is the Lease Buyback Scheme for retirees to make up for the inadequacy of their Central Provident Fund savings.
Most Singaporeans’ major asset is their Housing and Development Board (HDB) flat and they can sell back part of their lease tenure. The response rate to the scheme, however, is reported to be poor. The key reason is plain economics.
Take, for instance, a flat with a remaining 70-year lease and market value of S$323,000. The HDB would buy back 40 years of the lease for S$138,000, which is less than the simple division of 40 over 70, or S$185,000.
The HDB’s figure is derived by accounting for depreciation over time, whereas property owners believe that their asset should appreciate over time. As with Keppel Land’s retail investors, the choice is “take it or leave it”.
To a cash-tight, desperate or ignorant recipient, it would have been a “not fair but reasonable” offer, or injustice justified by confusing accounting methods or terminology.
The relevant enterprises should sit up and rework/improve their offers if the feedback is “not fair”, whether or not they think the offer is reasonable.
