CapitaLand announced this morning that it has entered into a transaction with Temasek to acquire from its subsidiary, Ascendas-Singbridge (ASB), all the shares in two wholly owned intermediary subsidiaries of ASB.

The proposed transaction is valued at an enterprise value of S$10.9b, of which S$6.0b is the equity value, while the remaining S$4.9b is made up of net debt and minority interest.

This acquisition is subject to approval by CapitaLand’s shareholders at an EGM. If completed, the combined total AUM of the group will exceed S$116b.

Under the terms of the agreement, Temasek will effectively receive S$6.0b, which will be satisfied 50% in cash (S$3.0b) and 50% in new CapitaLand shares (S$3.0b) which will be priced at S$3.50 per share.

This proposed transaction will significantly increase CapitaLand’s scale and allow it to have a strong presence in the industrial and logistics markets. CapitaLand expects to reap synergies given the complementary nature of ASB’s business to CapitaLand’s.

We currently have a BUY rating on CapitaLand with a fair value estimate of S$3.96, which is based on a 20% RNAV discount applied. More details will be provided after the analyst briefing later this morning.

Source: OCBC Research - 14 Jan 2019