SINGAPORE: An eight-month takeover battle for NatSteel Ltd looks set to end in bitter stalemate today, setting the stage for a messy boardroom brawl between two powerful Asian tycoons for control of the cash-rich steel miller.
Investment bankers expect Malaysia-born hotel magnate Ong Beng Seng’s conditional takeover offer of S$2.06 a share for NatSteel – valuing the company about S$750mil – to lapse when it closes today. There have been 4 extensions and just as many revisions since he mounted the bid in October.
Ong's consortium, 98 Holdings Pte Ltd, which includes powerful government investment agency Temasek Holdings, now holds 37% of Natsteel but its bid for a majority stake has been foiled by Indonesia-born asset trader Oei Hong Leong.
Oei has grabbed a spoiling 29.83% stake in Natsteel, which is sitting on a S$600mil cash pile.
After regulators blocked his own NatSteel bid, Oei startled much of Singapore’s conservative business community by mounting a surprisingly successful campaign urging shareholders to reject Ong’s offer as too low.
“The public is with Oei. That is expected because he is seen as the underdog in this battle, taking on Temasek and everyone. He is alone but he is a streetfighter,” said a director with an American investment firm who declined to be identified.
Oei, 54, who spent part of his childhood in China during the Cultural Revolution and is the son of Sinar Mas Group founder Eka Tjipta Widjaja, has been known for moving in and out of several Hong Kong- and Singapore-listed firms over the past decade.
He wants Natsteel to distribute its cash pile to shareholders and develop its China business, where the firm has three profitable mills.
Ong’s 98 Holdings needs to get more than 50% of NatSteel by this afternoon to win control. But he is expected to reach only 40%-45%, unless a big seller emerges at the eleventh hour.
“It looks like Ong will end up with 40%-45% of the company and Oei with about 30%. It is going to be a stalemate, but Ong will have the upper hand,” said an investment banker with an American firm.
Analysts said Ong’s strategy had moved in recent weeks from trying to win majority control of Natsteel to buying as many shares as possible in the open market to widen his lead over Oei.
“If Ong gets more than 40% at the close, his position can be quite unassailable. Whatever Oei proposes, he can vote it down,” said a Singapore broker. “The game is far from over. I think we can expect more fireworks after Friday. The fight for control of the company would be through proxies, and minorities will want to vote with Oei,” he added. – Reuters
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