The acquisition of Olam by Temasek is raising eyebrows and frowns from
many quarters. Kenneth Jeyaratnam has commented negatively on it. Below
is Christopher Balding’s article on the buy out of Olam. Temasek seems
to be very bullish in this commodity trading company. It came out in
full support when it was shorted down by Muddy Waters a year ago. Now it
is making an offer with the possibility to buying over the company at a
high price of $2.23 when it could have had the company for a song when
it was under attack. Why? Why buy at such a huge premium and not when it
was about 90c? Another case of buying high? OPM?
Why is Temasek supporting a foreign owned company to want to commit $2b
on it when it could buy it for less than half the present price? Another
long term strategy stuff?
‘Just had to write about this interesting little tidbit I saw today
about Temasek and Olam. According to news reports, Temasek through a
subsidiary is going to buy Olam at a 12% premium to the current share
price. This is an interesting development and to me raises a couple of
questions. First, I am intrigued that Temasek is paying a 12% premium
after the stock has already increased 30% since the first of the year.
This means that Temasek is either paying nearly a 45% premium to what it
could have paid just two months ago and is really slow to spot a value
in its own portfolio or insiders were buying the stock in advance of a
buy out offer they knew was coming. This 30% increase is even more
abnormal considering the Straits Times (Index) is essentially flat for
the year. Neither scenario is particularly attractive.
Second, this seems like a very oddly timed buy out. Prior to the first
of the year, Olam had traded primarily in the $1.50-1.75 SGD range and
this follows on the announcement that profit declined 13%. If Temasek
felt this strongly about Olam and its long term business prospects, it
would seem to be a better proposition to buy at the bottom of the market
because you know the business well and believe the market is
undervaluing the business. Not wait until there is a 30% increase in two
months and then offer a 12% premium. The general philosophy of long
term investors is buy low and sell high. I am just a professor though,
so what do I know.’
Christopher Balding
21 comments:
It's amazing what a fistful of dollars do to your ego.
Nothing strange about it; it's consistent with Temasek's strategy of buy high, sell low. Think Shincorp, ABC, Bank of America.
No pain involved as it's OPM; oh, wait a minute, it's OUR money.
Ouch.
Olam is a global leader in the supply chain management of agricultural products.
For Sinkieland with no land for agriculture, I think this Temasek decision is very strategic one, to supply Sinkies with enough food for 6.9 million, if need be.
If there is a company which can supply or make lots of fresh water, I think Temasek will also for sure invest in it. In fact, I think Hyflux is one.
The CPF minimum sum need to increase to $300,000. The draw out date need to defer to 70 years old. Huat ah.
The only reason I can think off this fucking stupid deal is Ho Ching got fuck by Olam CEO and she is now bailing out her cum pumper.
Olam is a fucking caste-ist/racist company, hell bent to impose caste system here and make us Dalits. The Olam top fucking managers are as below.
Sridhar Krishnan
Ashok Krishen
Venkatramani Srivathsan
Jagdish Parihar
Ranveer Chauhan
Sunny Verghese
Ashok Hegde
Gerard Manley
A. Shekhar
Vivek Verma
Other than one white man, all FT Indians. All her low rank underlings also FT Indians. Olam failed because she support caste system, hiring IQ82 Indians and not welcoming Singaporeans, the highest IQ people into the company.
Olam is such fucking company that her destruction should be celebrated by Lion dance. Unfortunately, seems that PAP would not let such a HQ of caste system evangelism fail.
Singaporeans, the smartest, kindest and most gentle people are made to bail out Olam, who are loaded with toxic financial instruments.
Taking olam private is quite obvious.
No lah, it just happen that Olam has a lot of Indians as top managers.
Even if Olam has Eskimos as top managers, I am sure Temasek will also invest for what Olam is, not because of the race of their top managers.
Sinkies even had an Indian Sinkie as President, and there are also 4 Indian Sinkie ministers.
I kick myself for selling out early. Perhaps to some one who had insider knowledge that this counter would fly soon.
Luckily still keep some olam bond, Pay 6.75% in US$
Tiok. Doesn't matter black, brown yellow or white cat, as long as they catch mice, it is a good cat.
Why not Temasek be more transparent.
Tell us what is their investment criteria for making "BUY" decision.
QUESTION
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How many Sinkies believe we will only find out when Pigs fly ... out of Singapore? ... kee chiu
Hi Veritas, welcome back. Just a friendly reminder that the anti harassment bill has been passed. So please hold back your horses when you get personal.
Bloggers do not have a facility to amend comments other than deleting and reposting. Otherwise I would take liberty to amend a few of the words you used in your comments in 1:23pm
Take it easy mate.
Temasek, welcome to the dark side.
Redbean,
in case the daft did not know , the very likely reason that TH has to bail Olam is because it is to prevent Olam from further investigation if it is collapsed. The investigation is most likely akin to something like the $2 scam company in AIM. First of all, there is issue of creative accounting in OLam discovered by Muddy, and surely there is mastermind of who actually instigated the creative accounting ( isn't that obvious who is the culprit ?) and this will be officially known once olam collapsed , hence to cover all tracks , TH will just bail out olam. Isn't you see how this PAP works ? Isn't that that how our national asset endup been PAP's asset ?
People don't just act blur and pretend not to know.
No lah, cannot make such wild allegations. Olam is managed by the best foreign talents Sin City can find. How to go wrong?
Did TH gave a good reason on the offer. If yes then fine. If no, they why
Cronyism : the unfair practice by a powerful person (such as a politician) of giving jobs and other favors to friends.
Most likely, all other indirect tax will increase further in near future to cover this purchase . All these screw ups are too spur sinkies to move on to greener pastures where housing and cars are affordable. Why settle for costly 99lhflats and crowded public transport when sinkies can have it better?
"No lah, cannot make such wild allegations. "
When the party accused and smear the oppositiion party with wild allegation, did we see the holy party men say anything about wild allegation ? No ? so surely they must be doing something right.
We just following their footstep of moral value and example. is there anything wrong with that ? they pay themselves millions so to say they are uncorrupted, so they are idol to follow, and we just follow their way of making statement the way they make. Don't blame us , blame the idol because they set the "good" example.
One comment above listed the senior mgmt is interesting. Is this common in listed companies?
If they smear people, report to Willaim Wan, Chairman of Kindness Movement and let him take it up with them lah.
'One comment above listed the senior mgmt is interesting. Is this common in listed companies?'
Not now but some time in the future many local companies will be like that.
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