Keppel O&M merge with SCM

Q&A
1

Hi all

as you read by now, Sembcorp Marine shareholders also voted in favour to merge Keppel O&M into SCM to form a larger entity, this was a long overdue merger and it actually removes the shackles from Keppel Corp P&L

because of this M&A, Keppel Shareholders will be give 19.13 SCM shares for every 1 Keppel share.
This means for every 1 lot (1000) Keppel shares, shareholders will receive 19,130 SCM shares

These SCM shares will be distributed by 1st March

How will we add this in Stockcafe? its not really a costs (since we will not be paying anything for it), actually its like a bonus “dividend”, do we add it like a Scrip dividend?

Anyone has any idea?

2

For such events, StocksCafe already had an ability to do it for everyone → One Click To Handle Stock Splits – StocksCafe Blog

The above article is about stock split but it is actually possible to handle M&A although it needs to be manually created by me.

  1. Evan manually create the M&A event in StocksCafe

  2. You simply click accept on or after 1 March.

Before I can create the M&A event, I need to ensure I get the facts right. Based on what you said, I assume the following will happen on 1 March 2023.

a) Every 1 share of Keppel, you will get 19.13 shares of SCM.

b) I assume you will also lose that share of Keppel after that?

If the above is correct then I can create the event.

Cheers,
Evan

3

Hi Evan

here are the facts based on what I know, I can try to get you the article:

  1. Keppel Corp shareholders WILL NOT lose their Keppel Corp holdings, it will remain, because Keppel is only divesting their O&M division to Sembmarine. not whole company

  2. Because of this divestment, the enlarged entity of SCM will give 19.13 Sembmarine stock to each Keppel shareholder for each share that they own

  3. this is like a bonus for Keppel Corp shareholders because just by owning Keppel, I will now also own equity in SCM (thats why I said it was like a bonus dividend, free equity) for long suffering Keppel Corp shareholders who did not get dividends for so many years when O&M was dragging down Keppel Corp earnings!!

4

Evan

here is the ST article

5

Thanks! From the article, it seems like the ExDate is 24 Feb and PayDate is 1 March.

6

Yes, I think so… deadline is 24th Feb

so you can make this happen? we don’t need to do anything?
Just accept on 1st March?

7

also its 19.1, not 19.13
ST made the correction

8

Yes, you just need to accept on 24 Feb and the transactions will be added for 1 March.

You need to remind me on 24 Feb though. Somehow I program the system such that future dates cannot be entered :frowning:

ps: Of course, I can change that but I suppose I had a good reason to do that in the first place :slight_smile:

1 Like
9

ok, will do
I will remind you

How will the transactions be created?
will it be logged as a BUY but no actual costs will be added to a user’s Portfolio and in effect, the added new SCM shares value & qty will be added into the user Portfolio?

10

That is also set manually. Personally, I prefer to the actual price of SCM on that day because I believe your Keppel will likely drop by some amount close to actual price of SCM? So, it is kinda like you sell a bit of Keppel to buy SCM.

Happy to hear your thoughts.

11

In my view no… some Keppel shareholders may quickly want to dump their SCM holdings for the “free money” so SCM may dip further due to many dumping their allotments…
But I think Keppel will have more upside, market is always forward pricing… so if your analogy will happen, it will happen in run up to 1st March…

my 2c :slight_smile:

12

Ah… Guess I did not explain well :frowning:

What I meant is that the fact that there is this divestment, it is like they are selling some assets of Keppel but instead of getting it in cash and return to shareholders, they are “forcing” you to buy SCM.

Therefore, it is selling part of Keppel to buy SCM. So, I think pricing the SCM shares at 0 is “wrong” and it is better to price it at how much SCM was when you are “force” to buy.

13

not force to buy SCM
its “give” you free SCM since Keppel Corp as a company “not as big as before”

in terms of pricing the SCM shares, agree with you, it cannot be “0”
it should priced as per SCM price on 1st Mar or Ex 24th Feb

14

there is NO costs on the part of Keppel Corp shareholders
we dont need to pay anything for the 19.1 share SCM

15

This is the cost I am referring to :slight_smile:

16

Hi Evan

Looked at the Events page. It says “Stock dividend of 1 new shares of Sembcorp Marine Limited (Symbol: S51) for every Keppel Corporation” …

Should it not be *“19.1 new shares of Sembcorp Marine Limited (Symbol: S51) for every Keppel Corporation” * ?

Thanks

17

Hi guys,

For myself, I had entered a manual dividend (Override on Dividends tab) with ex date on 23 Feb and pay date on 1 March of $2.5594 (19.1 * $0.134).

Then “buy” 19.1 SembMarine on 1 Mar at $0.134.

18

Let me delete that later. It is auto generated. Thank you for reporting.

@gumby How does this sound?

1 Like
19

Hi Evan

This approach makes sense if I can manually amend BN4’s "adjusted-for-distribution cost (or average price) " of my current holdings.

20

Update: See this post → Sembcorp Marine acquisition of Keppel O&M – StocksCafe Blog

There are two ways to handle this spin-off. I will let user decide which is best.

a) Treat it as a scrip dividend style

  1. Create a dividend override for Keppel (SGX:BN4) worth 2.5594 per share with ExDate 24 Feb and PayDate 1 Mar (How to Override Dividends - StocksCafe Academy)
  2. Create a buy transaction of 19.1 shares of SembMarine (SGX:S51) on 1 March at 0.134 for every share of Keppel (SGX:BN4) that you own.

b) Treat it as a stock split style

  1. Sell Keppel at the market value on 22 Feb (i.e. price = 7.34).
  2. Buy Sembcrop at market value of 22 Feb (i.e. price = 0.134, shares = actual number of shares you received) on 23 Feb.
  3. Buy Keppel back at the market value you sold (i.e. price = 7.34) at minus the market value of Sembcrop (shares received x 0.134 or 19.1 x 0.134 = 2.5594 assuming you actually got 19.1 because it is likely different due to rounding) on 23 Feb. Hence, if you actually got 19.1, then price = 7.34 - 2.5594 = 4.7806.
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