SINGAPORE: Hotel magnate Ong Beng Seng won control of NatSteel Ltd yesterday, but only by a wafer-thin margin, ending an eight-month takeover battle for the cash-rich steel miller.
According to Ong's financial adviser, he edged out rival tycoon Oei Hong Leong by garnering 50.31% of NatSteel’s shares, only slightly surpassing the 50% plus one share needed to win control.
Ong's investment vehicle, 98 Holdings Pte Ltd, is said to have acquired a 42.08% stake in NatSteel and received an additional 8.23% in acceptances from minority shareholders of his offer of S$2.06 a share.
The offer had accordingly been declared unconditional and would remain open until Jan 24, Standard Chartered Bank said.
“We are delighted with the result and as the majority shareholder, look forward to working with the board and management in the interests of all shareholders, large and small,” of 98 Holdings director David Ban said in a statement last night.
Questions now surround a spoiling stake of nearly 30% held by Oei, who had campaigned for weeks to convince shareholders to reject Ong’s offer.
Neither Oei nor his financial adviser, G.K. Goh Stockbrokers, could be reached immediately for comment.
Minority shareholders likely decided the surprise outcome for control of NatSteel, coveted for its three profitable mills in China, S$600mil in cash and dominant presence in Singapore.
The battle had pitted Malaysia-born Ong, known for his interests in popular restaurants and hotels such as Hard Rock Cafe and Four Seasons Resorts, against Oei, son of Indonesian-Chinese tycoon Eka Tjipta Widjaja, who founded the sprawling Sinar Mas Group.
In a bid to thwart Ong’s offer, Oei had snapped up another 250,000 NatSteel shares at S$2.07 each yesterday morning, raising his stake to 29.9%. Many investment bankers had expected Ong’s S$2.06-a-share offer worth S$770mil to fail.
“This is a surprise. We thought he was not going to make it,” said a trader heading the global equities desk at a European bank in Hong Kong.
NatSteel’s shares closed at S$2.07 yesterday after hitting a low of S$2.02 immediately after 3.30 pm when Ong’s offer expired.
The focus will now turn to the stake held by Oei, NatSteel’s single largest shareholder. If he sells his 111.68 million shares – bought at an average cost of S$2.03 per share – to 98 Holdings, he would net around S$3.35mil.
Oei had rejected Ong’s conditional offer and waged a surprisingly successful campaign in urging minority shareholders to spurn Ong’s offer on the grounds that it was too low.
Some analysts expect Oei to sell his stake now that the offer has gone unconditional. “I am sure Oei will throw in his stake,” said a banker with an American investment firm. “He won’t want to get stuck.”
Oei, 54, who spent part of his childhood in China during the Cultural Revolution and had pressed for NatSteel board representation, has been known for moving in and out of several Hong Kong and Singapore listed firms over the past decade. In recent weeks, he has travelled to China to look for opportunities for alliances.
“He has to be very determined if he doesn’t sell,” said another banker. “It will be a stuck scenario, the market won’t be able to take his 30% stake and he will have to accept whatever 98 Holdings offers if he wants to sell.”
Analysts said a stalemate between Ong and Oei would be among the worst outcomes for NatSteel, which also operates in Malaysia, Vietnam and the Philippines.
Ong’s consortium would likely have the upper hand with its larger stake in the company, but lingering rivalry between him and Oei could sow the seeds of boardroom friction.
NatSteel was among Singapore’s best performing stocks of 2002 as a direct result of the takeover battle. – Reuters
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