Temasek Unit Scraps $3 Billion Bid for Keppel

A worker stands in front of the Floatel Triumph, a semi-submersible accommodation rig operated by Floatel International Ltd. and developed by Keppel Offshore & Marine Ltd.'s deep water technology group, during a media tour in Singapore, on Friday, March 11, 2016. Keppel Corp., parent company of Keppel Offshore & Marine, is the world's biggest builder of oil rigs. Photographer: Nicky Loh

Kyanite Investment Holdings, a unit of Singapore state-backed investor Temasek Holdings Pte, scrapped its bid to take control of Keppel Corp. after the oil-rig builder posted a second-quarter loss.

Kyanite invoked a clause allowing it to withdraw the offer after the quarterly loss failed to meet pre-conditions of the bid, it said in a statement Monday. Kyanite in October offered S$4 billion ($2.9 billion) for an additional 30.6% stake in Keppel. Temasek already owns one-fifth of the conglomerate, whose businesses include offshore and marine infrastructure and property development.

There were warning signs that the deal may not go through when Keppel reported a net loss of S$697.6 million for the three months ended June 30. That was Keppel’s first quarterly loss in more than two years as Singapore’s partial lockdown slowed production at its yards, with impairment losses at an associated company further denting its bottom line. Keppel shares have tumbled 20% this year.

Under the bid conditions, Keppel needed to have a net asset value above S$10.3 billion and cumulative net income after tax but before non-controlling interests of more than S$556.9 million. Both were cited in June as key benchmarks by Morgan Stanley, Temasek’s adviser on the deal. However, Keppel’s quarterly loss meant it didn’t satisfy a pre-condition related to after-tax net income.




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