Thursday, December 19th, 2024

Silverlake Axis Goes Private: A Game-Changing Dual-Pricing Strategy Shakes Up the Market

 

Silverlake Axis, a Singapore-listed technology solutions provider, has turned heads with its innovative privatisation strategy. The deal, spearheaded by founder Goh Peng Ooi and private equity firm Ikhlas Capital, leverages a unique dual-pricing structure that could inspire future corporate buyouts.

What Makes This Deal Unique?

The dual-pricing structure gave shareholders two options:

  1. Option 1: A straightforward 36 cents per share cash payout—a premium of 20% over the last traded price and 31.9% over the six- and 12-month volume-weighted average prices.
  2. Option 2: A combination of 30 cents cash upfront plus one redeemable preference share (RPS), mandatorily redeemed in five years for 18 cents. This structure provided a total payout of 48 cents, translating to an effective cost of 40 cents for the offeror when adjusted for time value.

This approach balanced immediate liquidity with deferred payouts, catering to varying shareholder expectations and generating strong participation.


The Result: A Landmark Privatisation Success

The offer achieved an acceptance level of 98.33%, surpassing the 90% threshold required for compulsory acquisition. Silverlake Axis will now delist from the Singapore Exchange, transitioning to full private ownership under Zezz-Ikhlas.

Goh expressed his satisfaction:
“We are delighted to have surpassed the demanding compulsory acquisition threshold. Silverlake will now fully transform its business and deliver revolutionary solutions for our customers.”


Why This Strategy Worked

  1. Appealing to Diverse Shareholders:
    • Upfront Cash Seekers: Option 1 provided immediate liquidity with decent premiums.
    • Growth-Oriented Investors: Option 2 attracted those seeking a higher total payout over time.
    • Market Speculators: The dual-pricing model mobilised buyers to trade shares at premiums above 36 cents, betting on Option 2’s potential.
  2. Optimising Costs for the Offeror:
    • By deferring part of the payout, Zezz-Ikhlas reduced the upfront financial burden while still offering competitive returns to shareholders.
  3. Liquidity Advantage:
    • Silverlake’s historically low trading volumes—less than 0.04% of its total shares traded daily—added to the attractiveness of a guaranteed exit for shareholders.

Silverlake’s Financials: A Mixed Bag

Despite achieving record revenue of RM783.5 million in FY2024, net profit dropped 38.2% year-on-year to RM105.2 million due to project delays. The privatisation reflects the offerors’ belief that Silverlake’s market valuation didn’t fully capture its growth potential or intrinsic value.

Thank you

Gamuda: Steady Growth with Strategic Market Position

Date: October 22, 2024Broker: CGS International Company Overview Gamuda Berhad is a leading infrastructure and construction company in Malaysia. The company is involved in various projects ranging from property development to large-scale infrastructure projects,...

CLMT is projected to achieve a 3-year earnings per unit (EPU) CAGR of 8.2% over FY23-26

CapitaLand Malaysia Trust (CLMT) – 3QFY24 Report Summary CapitaLand Malaysia Trust (CLMT) is positioned for steady growth, leveraging the strong performance of its key retail and industrial assets. Below is a detailed overview based...

Bullish Momentum Builds for Smoore International Holdings as Upside Breakout Signals Growth

Date of Report: September 24, 2024Broker: CGS International Securities Company Overview Smoore International Holdings Co Ltd (6969.HK) is a Hong Kong-based company specializing in vaping technology solutions. The company is recognized for its advanced...