CapitaLand and Ascendas-Singbridge in S$11-billion deal to create Asia’s largest diversified real estate group
1. What is the proposed transaction?
CapitaLand Limited (“CapitaLand”) has entered into a transaction with Temasek to acquire from its subsidiary, Ascendas-Singbridge Pte Ltd (“ASB”), all the shares in the two wholly-owned subsidiaries of ASB. The proposed transaction is valued at approximately S$11 billion and is subject to approval by CapitaLand’s independent shareholders at the Extraordinary General Meeting (“EGM”) on 12 April 2019.
2. What is the rationale for the proposed transaction?
The proposed transaction will create the largest diversified real estate group in Asia (the “Group”). The combined total assets under management (“AUM”) of the Enlarged Group will increase to S$123.4 billion. The Group’s expanded asset classes will include logistics/business parks, industrial, lodging, commercial, retail and residential. Its geographical presence will span more than 180 cities across over 30 countries. This puts CapitaLand amongst the top 10 real estate investment managers globally; as well as the manager of the three largest real estate investment trusts (REITs) listed on the Singapore Exchange, namely Ascendas Real Estate Investment Trust, CapitaLand Mall Trust and CapitaLand Commercial Trust.
As a result, the proposed transaction brings numerous benefits including:
1) Achieves immediate scale in new economy sectors such as logistics and business parks
2) Deepens CapitaLand’s presence in its core markets of Singapore and China
3) Builds scale and capabilities in CapitaLand’s growth markets such as India, Australia, the USA, Europe and Vietnam
4) Secures sizeable development pipeline across core markets
5) Enhances fund management capabilities
6) Strengthens digital capabilities for business innovation
7) Attracts talent to strengthen rea estate expertise and capabilities
3. What are the proposed terms of the transaction?
Under the terms of the agreement, Temasek will receive approximately S$6.0 billion, which will be satisfied 50% in cash (S$3.0 billion) and 50% in new CapitaLand shares (S$3.0 billion). The shares will be priced at S$3.50 per share, representing a premium of:-
(a) 7.03% over the last traded price of S$3.27 as at 11 January 2019, being the last trading day before the date of the announcement (the “Last Trading Day”) issued by CapitaLand on 14 January 2019 (the “Announcement Date”) in relation to the Proposed Transaction (the “Announcement”); and
(b) 2.04% over the last traded price of S$3.43 as at 8 March 2019, being the latest practicable date prior to the printing of this Circular (the “Latest Practicable Date”).
The consideration takes into account the adjusted net asset value of ASB, which includes the value of its fund management platform and the trading value of its three sponsored listed trusts.
4. How will the cash portion of the consideration be funded?
The cash portion of the proposed transaction will be funded from debt and other financing alternatives.
CapitaLand does not intend to issue additional new shares to finance the cash portion of the proposed transaction, other than shares to be placed with Temasek as part of the consideration.
5. What is the rationale behind the construct of the purchase consideration? Has CapitaLand considered having shareholders’ participation such as rights or warrants issue?
We carefully considered the amount of fresh equity that would be required and suitable for this transaction. We evaluated a wide spectrum of capital structures, including an all cash structure on one end of the spectrum, and a rights issue on the other.
We also believe that we should not ask our shareholders to contribute additional capital, unless it was absolutely necessary. We have therefore not done so. Hence, we concluded that the optimum structure would be a 50:50 Cash/Share structure, with the Shares issued to the Vendor as part consideration. We believe that this structure offers the best balance between adding unnecessary stress on our Balance Sheet, and unwanted additional dilution to NAV and ROE.
Adding other features such as warrants ultimately results in having to potentially issue more equity, which would have resulted in a sub-optimal structure, by further diluting NAV and ROE, which are key to delivering value to shareholders.
6. How was the issue price of S$3.50 for the consideration shares determined?
We have negotiated that the shares be placed at S$3.50 which is at a premium to historical undisturbed trading levels across various periods.
- 7.0% premium to our trading price of S$3.27 as at 11 January 2019, being the last trading day before the date of announcement (“LTD”) issued by CapitaLand on 14 January 2019 in relation to the Proposed Transaction;
- 11.3% premium to 1-month volume weighted average price (“VWAP”) of S$3.145;
- 11.6% premium to 3-month VWAP of S$3.136; and
- 2.0% over the last traded price of S$3.43 as at 8 March 2019, being the latest practicable date prior to the printing of the Circular (the “Latest Practicable Date”).
Since the announcement, the market reacts positively to the Proposed Transaction which delivers immediate ROE and EPS accretion and will transform CapitaLand into one of the leading diversified real estate companies in Asia.
7. What has been done to ensure the interests of CapitaLand’s non-interested shareholders?
An Independent Financial Advisor (“IFA”) to CapitaLand’s independent directors, Rothschild & Co, is appointed. The IFA report is attached to the Appendix I of the Shareholder’s Circular.
The proposed transaction is subject to approval by a majority of independent shareholders in the EGM. Temasek and its associates and/or concert parties (as applicable) would not be able to vote on the resolutions at the EGM.ading diversified real estate companies in Asia.
8. Is the proposed transaction subject to approvals from shareholders and/ or other authorities or regulatory bodies?
Yes, approval of the proposed transaction will be sought from the independent shareholders of CapitaLand.
As the proposed transaction will trigger an obligation on Temasek to make a mandatory general offer for the shares in CapitaLand which it does not own, a whitewash resolution will be tabled at the EGM to seek the approval of CapitaLand shareholders to waive their right to receive the offer from Temasek.
Temasek, its associates and/or concert parties (as applicable) will abstain from voting in respect of the resolutions tabled at the EGM as required by the Securities Industry Council and under the Listing Manual.
9. Where and when is the EGM?
EGM will be held on 12 April 2019 (Friday) at 11.30am (or as soon thereafter as the Annual General Meeting of CapitaLand to be held at 10.00am on the same day and at the same place is concluded or adjourned). Venue of the meeting is at The Star Theatre, Level 5, The Star Performing Arts Centre, 1 Vista Exchange Green, Singapore 138617.
10. When will the proposed merger be completed if the necessary approvals are obtained?
Completion is subject to the fulfilment of certain other conditions precedent if shareholders approve all the 3 ordinary resolutions at today’s EGM. The transaction is expected to be completed in the 3rd quarter of 2019.
11. What is Temasek’s shareholding post completion of proposed transaction?
Temasek’s ownership of CapitaLand will increase from 40.69% to 50.84% upon the close of the proposed transaction.
12. Will CapitaLand be making any offer to acquire the units in the Listed Trusts that are not already held by ASB?
CapitaLand is not required to make any chain offers for ASB’s listed trusts as a result of the proposed transaction.
13. Would there be an impact on dividends for CapitaLand shareholders?
There is no change to CapitaLand’s dividend policy.
14. What do shareholders need to do in relation to the transaction?
Shareholders can either attend the EGM in person to vote on each of the 3 ordinary resolutions, or appoint a proxy (if no specified proxy is appointed, chairman will be the proxy) to vote at the EGM on their behalf, unless required to abstain from voting.
If shareholders are appointing a proxy, Proxy Forms need to be completed, signed and returned to CapitaLand's Share Registrar, M & C Services Private Limited, in accordance with the instructions printed thereon to reach the Share Registrar as soon as possible and no later than 9 April 2019 (Tuesday) at 11.30am being 72 hours before the time fixed for the EGM.
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15. When would EGM results be known and how would they be announced?
The voting results of each ordinary share will be shared on screen at the meeting.
CapitaLand would also make an announcement after the EGM on the same day (12 April 2019) and the announcement can be viewed on the SGX-ST or on CapitaLand websites.
 The two subsidiaries, Ascendas Pte Ltd (APL) and Singbridge Pte Ltd (SB), are the holding companies of the business of ASB. APL holds business space and industrial development platforms and fund management platforms; and SB holds the joint ventures for large scale urban development projects.
 As measured based on publicly available AUM information for diversified real estate developers in the Asia Pacific region.
 Source: IPE Real Estate Top 100 Investment Management Survey 2018 (as of 30 Jun 2018)