Keppel O&M hive-off is earnings accretive and will yield marked benefits, says Keppel Corp


SINGAPORE – Keppel Corp’s complex billion-dollar disposal of Keppel Offshore & Marine (Keppel O&M) will bring marked benefits to the company and its shareholders, it noted on Wednesday.

KepCorp said the $3.4 billion gain from the sale to Sembcorp Marine significantly mitigates the erosion in its net tangible asset while also boosting its return on equity and earnings per share.

The merger of Keppel O&M with Sembmarine will see Keppel receive 54 per cent or 36.8 billion Sembmarine shares with a total implied value of about $4.5 billion.

Keppel will distribute in specie 49 per cent of these shares or approximately 19.1 Sembmarine shares for every Keppel share held to its stockholders. This exercise has an implied value of approximately $4.1 billion.

But Keppel will also book a one-off gain of about $3.4 billion for the disposal of Keppel O&M.

The KepCorp statement on the Singapore Exchange site also was aimed at addressing some shareholder concerns about the difference between the $3.4 billion in gain and $4.1 billion in distribution.

The company pointed out that the difference would have a marginal impact of just 28 cents a share to Keppel’s net tangible asset.

If there had not been the significant transaction gain booked in, the distribution in specie would have been more dilutive to net tangible asset, Keppel said.

Keppel also pointed out that the disposal of Keppel O&M would have boosted its return on equity and earnings per share (EPS) on a pro forma basis as at Dec 31, 2022. Pro forma calculations compare the numbers if the deal been done at the end of the previous financial year, which in Keppel’s case was Dec 31, 2022.

On a proforma basis, return on equity excluding disposal gain for 2022 would have been 9 per cent, versus 39.4 per cent, including the one-off disposal gain. EPS on a pro forma basis would have been 56.7 cents if the one-off disposal gain had been excluded but rises to 248.1 cents if it is included.

“The completion of the O&M transactions marks a big step forward in Keppel’s Vision 2030 strategy,” Keppel said in the statement.

It noted that the group is transforming into “a global asset manager and operator, with strong capabilities in energy and environment, urban development and connectivity”.

Market insiders said the explanation provided in the statement gives a clearer picture of the outcome of the transaction and points to the intrinsic merit of the deal.

Keppel shares will go ex-dividend for the in-specie exercise at 9am on Thursday.


Source link

Denial of responsibility! galaxyconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave A Reply

Your email address will not be published.