The Next Singapore Takeover Target

Some professionals are beside themselves with excitement after Keppel Corporation (SGX: BN4) swallowed up Keppel Land (SGX: K17).

They are wondering which property developer might be next.

Could it be Wing Tai Holdings (SGX: W05) or Ho Bee (SGX: H13) ? Maybe it could be Hong Kong real-estate powerhouse Wheelock Properties (SGX: M35)?

There are, apart from in Singapore, lots of mergers-and-acquisitions going on at the moment around the world.

Companies that are flush with cash and unable to grow are looking at acquisitions to boost their top lines. Those that don’t have quite enough cash might consider using their lofty share price as currency.

And those that don’t have either could turn to willing bankers who have more money than they know what to do with right now.

The recent headline-grabbing acquisition of Keppel Land by Keppel Corporation has certainly set the cat amongst the pigeons. Other deals have been mooted.

After all, with onerous property cooling measures, falling condo prices and reluctant buyers sitting on the sidelines, Singapore developers are looking for innovative ways to circumvent the Residential Property Act that penalises the holding of vacant flats

Exciting prospects

Takeovers and privatisations are always exciting, especially, if you happen to own shares in the target company. It usually means that the shares could rise, and sometimes quite significantly. In the case of Keppel Land, the shares jumped by more than a quarter.

But to capitalise on a takeover, it is important to get in before there is even the faintest whiff of a stalker on the prowl.

However, spotting a takeover target is not straight forward. And even if you do manage to identify one, it is not easy to determine the timing of the takeover.

And just because a business looks ripe for a takeover, privatisation or de-listing does not necessarily mean that a bid will happen at all. Nor does it mean that the company is a good business to invest in.

When investing it is always important is to make sure that the underlying business is sound. After all, predators will be looking for the same thing too, if they are going to stump up a substantial premium to buy the company.

A version of this article first appeared in the Independent on Sunday.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.