The obvious choice was a sale to Jardines, which already owned 29% through Jardine Strategic, and had slowly been upping its stake by taking dividends in scrip rather than cash. The problem, however, was that such a purchase would lead to a potential S$800 million cash outlay, as by breaching the 30% ownership level, the deal would trigger a general offer to all shareholders.
On Friday it was announced that Singapore's Securities Industries Council had given a waiver on the general offer provision of the takeover code, and allowed Jardines to make a partial offer for the 21%, taking its ownership to 50.4% for an outlay of S$241.7 million ($138 million).
Why the takeover code was overruled is unclear. But Jardines partial offer does have risks for EON. Jardine has said it will only buy 21% of Cycle & Carriage's stock, and will offer a price of S$4.76, which is a 1.24% to the last price. This is a price that EON is comfortable tendering all its stock at, but should other shareholders wish to tender, EON will be proportionately scaled back. In the extreme, this could mean that if enough individual shareholders tender, EON could be scaled back significantly, which will not be ideal from its perspective.
Whatever happens Jardines will control Cycle & Carriage, whose crown jewel asset is a 31% stake in Indonesia's Astra. Cycle & Carriage's stock price has performed well in the last six months, nearly doubling from the S$2.60 level in November.
Jardines has also said it want to buy 40% in Cycle & Carriage's real estate affiliate MCL Land, and has offered to pay S$162.7 million for this. It is being advised by its house adviser, UBS Warburg.
