DBS Land Archive


Determination of the Exchange Ratio for the Proposed Merger of DBS Land and Pidemco Land

Singapore, 15 July, 2000

DBS Land Limited
(Incorporated in the Republic of Singapore)

Pidemco Land Limited
(Incorporated in the Republic of Singapore)

On Wednesday, 12 July 2000, DBS Land ("DBSL") and Pidemco Land ("Pidemco") announced their plans to merge. The management of DBSL and Pidemco would like to take this opportunity to further explain the determination of the exchange ratio for the merger.

The exchange ratio of 0.928 was determined on the basis of the revalued net asset value ("RNAV") of DBSL relative to the RNAV of Pidemco as of 31 May, 2000 and negotiations between the management of the two companies. This RNAV analysis resulted in an exchange ratio of 0.896, which was then increased in favor of the DBSL shareholders to 0.928, based on such negotiations.

The RNAV was determined as follows:
The value of real property, including land, was determined by property valuations made by international, independent property valuers who were jointly appointed by the independent directors of DBSL and Pidemco. In the determination of RNAV, the development potential of the landbank of each company has been taken into account. In order to ensure consistency and fairness in the process, the same valuer was used for both DBSL and Pidemco for similar assets within each market. The property valuations were approved by the Board of Directors of both DBSL and Pidemco.

The value of DBSL's and Pidemco's interests in listed property companies (i) Raffles Holdings, (ii) Ascott, (iii) Australand, (iv) Hind Hotels, and (v) Somerset was based on the RNAV of such companies.

The value of DBSL's minority interests in listed property companies, (i) United Malayan Land, (ii) Sea View Hotel, and (iii) SC Global, were based on the three month average share price of such companies for the period ending 31 May, 2000.

For the listed non-property company, Parkway Holdings, the value of DBSL's minority interest was determined based on the three month average share price for the period ending 31 May, 2000.

The value of the third party management businesses of each company (ESMACO and PREMAS) were valued based on appropriate EBITDA multiples and DBSL's investment in Vista Healthcare (a private company) was valued at cost.

The RNAV was adjusted for working capital and corporate liabilities including adjustments to reflect unrealised gains on properties sold but not yet billed, tax on revaluation gains for trading properties, and provisions for development charges.

Based on the above, as of 31 May, 2000, (i) DBSL's RNAV was S$4.3 billion or S$3.28 per share and (ii) Pidemco's RNAV was S$4.1 billion or S$3.66 per share. DBSL's RNAV of S$3.28 per share is a 25% premium above its closing price of S$2.63 on 11 July, 2000, the last trading day before the announcement, and a 42% premium above its three month average share price for the period ending 11 July, 2000 of S$2.31. Pidemco is currently unlisted and no comparisons can be made against a listed share price. As noted above, based on these RNAV numbers, the exchange ratio would have been 0.896.

The RNAV figures, valuations and valuers reports on the properties for each company were reviewed and approved by the management of both DBSL and Pidemco.