Most of us love to visit Tampines Retail Park for various reasons such as visiting IKEA, Giant Hypermart and Courts. I visit the area for the once-tasty chicken wings served by IKEA’s Café, Courts nice-smelling coffee on the second floor of the retail space as well as to stock up provisions at Giant Hypermart.
I will still visit the area but will probably skip Courts for one reason: Shortchange us once, shame on you. Do it twice, shame on us!
If you have been reading up or following the announcements on Singapore Exchange website, you will probably know that Courts Asia (Courts) has been sold to Japan’s Nojima Corporation for $0.205 apiece, a huge premium over its last traded price of $0.152 on 17 January. Wah, damn generous!
But do bear in mind that the share price of Courts Asia has been sliding from as high as $1.175 all the way to about $0.30 in 2018 before crashing to $0.152! The blame for the horrendous share-price performance is, of course, on competition from e-commerce players. Huh? Didn’t Courts have its own e-commerce site?
Nobody would blame its major shareholder for bailing out of a money-losing venture. However, the manner in which Singapore Retail Group (SRG), owned by Asia Retail Group (ARG), bailed out has surely left a bitter taste in investors’ mouth – in fact more bitter than Kopi O Kosong!
This is the second time that SRG has performed a fait accompli!
In 2007, Courts Singapore (old name) was delisted from the SGX at $0.55, a one-cent premium over the last traded price. That was the offer made to the minority shareholders who account for less than 10 percent of the total shareholders.
What was shocking back then was that the offer price stood at a huge discount to its FY08 Net Asset Value (NAV) of $0.7057 and lower than an earlier offer of $0.645 made a year ago for a 45.8 percent-stake that it did not already own. The party that made the offer? Barings Asia Private Equity and Topaz Investment. This Barings-led entity privatized Courts Singapore and Courts Malaysia for a combined sum of $84 million.
In 2012, the combined entity, which is what we now know as Courts Asia, was offered to investors at a huge premium of $137 million versus the delisting price of $84 million. Not too shabby for tidying up the furniture detailer and making some $53 million for five years’ work, eh?
In 2019, SRG has now sold 382 million shares, or a 73.8-percent stake, to Nojima Corporation at $0.205 or $78.3 million. For a dozen years of work, SRG has made $131.3 million “trading in and out” of Courts.
Minority Shareholders How?
In 2007, the majority shareholder had already shown blatant disregard for minority shareholder interest by making a final takeover offer that was lower than the initial offer as well as substantially below the NAV.
In 2019, the same majority shareholder is doing the same thing by selling Courts Asia on the cheap! At $0.205 versus its 1H19 NAV of $0.373!
And how come we do not hear some association, organization and activist cry foul over this one?
If you are hoping for a higher offer, chances are low as SRG delisted Courts with an even lower final offer back in 2007. But this time round the company that is making an offer is not SRG but a Japanese company. There could be a slight chance of a higher offer. But how high is high enough for minority shareholders when the takeover bid is executed at a multi-year low?
Moreover, there is no chance of a competing bid coming in for Courts Asia after SRG accepted Nojima’s offer pledging not to accept an offer for a third party.
Smells like Sashimi! Raw deal!