PROPERTY player Chip Eng Seng’s independent financial adviser (IFA) Xandar Capital on Tuesday (Dec 27) said terms of couple Gordon and Celine Tang’s offer to privatise the company at S$0.75 per share are fair “on balance” when asked to elaborate on how it concluded that the deal is “fair and reasonable”.

The final offer consideration represents a discount of approximately S$0.5863 or 43.9 per cent to the revalued net asset value (RNAV) per share of S$1.3363, drawing queries from the Singapore Exchange Securities Trading (SGX-ST).

Responding to SGX-ST, Xandar said that while the discount to RNAV per share is high, it came to the conclusion that the offer is fair since the “against” factors did not outweigh the “for” factors.

Supporting the “for” side are eight factors with financial metrics equal to or above the value or valuation of Chip Eng Seng’s shares, it said. Only three factors fall below the value or valuation of the shares, and are against the fairness of the consideration, it added.

Each of the factors underlying the opinion has values assigned to the shares, including valuation statistics such as premium or discounts to volume-weighted average price, price-to-earnings (P/E) ratio, and price to net asset value (P/NAV), Xandar said.

As for its consideration on whether the offer is reasonable, the IFA said it “should consider other matters”, including the existing voting rights of the offeror and its concert parties, and the market liquidity of the offeree securities.

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Xandar, meanwhile, highlighted a few “for” factors as set out in a letter to the recommending directors in respect of the offer.

Its comparison between the P/NAV ratio implied by the consideration and the trailing P/NAV ratios of the shares “clearly depicts” that the former is higher than the latter between Oct 18, 2019, and Sep 8, 2022, which is the holding announcement date, it pointed out.

It also stated that the P/RNAV ratio of the company as implied by consideration is within the range and higher than the mean and median P/NAV ratios of comparable companies which have not taken into account RNAV adjustments, if any.

“Hence, the IFA is of the opinion that, as of the date of the IFA Letter, the terms of the offer, on balance, are fair,” it said.

On why it had used the last six months of 2021 and first half of 2022 to calculate the P/E ratio and other figures, Xandar reasoned that it is “in line with industry practice” to use trailing 12-month results.

The IFAs appointed in the recent takeover offers of Singapore Medical Group, Silkroad Nickel and GYP Properties had adopted the same practice, it pointed out.

It also said that it is not possible for the IFA to make calculations since the company’s current financial year has not ended, as it will entail having to make a forecast. Chip Eng Seng’s financial year ends on Dec 31, it noted.

Meanwhile, a separate bourse filing on Tuesday revealed that as at 6 pm on Dec 27, the offer has received valid acceptances amounting to over 481.3 million shares, representing about 61.4 per cent of the total number of shares.

Shares of Chip Eng Seng closed flat at S$0.75 on Tuesday.