Ivey Publishing
Keppel Corporation's Buyout Offer for Keppel Land
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12 pages (3 pages of text)
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Case (Pub Mat)
On January 21, 2015, a trading halt was placed on the shares of Keppel Corporation (Keppel Corp) and Keppel Land Limited (Keppel Land). On January 23, 2015, Keppel Corp announced an offer to take its subsidiary, Keppel Land, private. At the time of the offer, Keppel Corp already owned 54.6 per cent of Keppel Land. The buyout offer used a two-tier pricing approach with a higher price paid if Keppel Corp acquired a threshold number of shares. Keppel Corp would have the right to receive any distribution that might be declared, paid, or made by Keppel Land on or after the purchase date. The offer was scheduled to close on March 12, 2015. On February 2, 2015, Keppel Land appointed KPMG Corporate Finance Pte. Ltd. as the financial adviser to the independent company directors regarding the offer. Minority shareholders of Keppel Land were interested in evaluating Keppel Corp’s offer and examining its motivations. This would require that they compute the premium and net present value of the company, as well as analyze the revenue and cost synergies of the buyout.
Learning Objective:
This comprehensive valuation case can be usedin corporate finance or financial management courses at the undergraduate and graduate level. It presents an opportunity for students to do the following:
  • Understand the real estate industry.
  • Review the discounted cash flow valuation of an entire company, including an estimation of the free cash flows, revenue growth rates, terminal growth rates, and appropriate weighted average cost of capital.
  • Perform sensitivity/scenario analyses on some of the assumptions.
  • Conduct a relative valuation analysis using various multiples derived from peer groups.
    Finance,  International
    Real Estate and Rental and Leasing
    Singapore, Large, 2015
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