Shares of Keppel Corp. settled at their lowest point in over four years after Singapore investment group Temasek Holdings abandoned its $4.1 billion conditional bid to acquire Keppel.
The stock of Keppel ended 11 percent down after sliding almost 13 percent, making it the worst-performing stock on the Straits Times Index. The company's dollar bonds, set to expire in 2025, was also the biggest decliner since shareholders disposed of them in May, prices gathered by Bloomberg showed. Keppel was up 0.4 percent in trading on Wednesday.
Keppel's retreat on Tuesday came as the company reported a net loss of $697.6 million in the second quarter, infringing on a pre-condition for the group's bid.
KGI Securities Singapore analyst Joel Ng said that Temasek's about-turn is "a surprise" as he estimated the company to trim down its price proposal for Keppel in the wake of the ongoing global health disaster's effect.
After collapsing more than 12 percent on Tuesday's opening session, Keppel shares settled lower at 60 cents at $4.80, stretching declines of over a quarter since the beginning of 2020. Roughly 32 million shares changed hands for the day.
Analysts said the timing of Keppel's disclosure was very unexpected, which came before Aug. 31, the date by which the company said it would come up with a final decision.
United First Partners director Jin Rui Oh stated that Temasek's change of heart has sparked a precedent of the government-backed holding firm scrapping agreements, citing "material adverse change clause," and stressing that investors must pay more attention to such pre-conditional arrangements in the future.
The MAC clause requires that Keppel's post-tax earnings must not drop by over 20 percent, or under $557 million, in the four quarters starting from the third quarter ended September 30, 2019.
Meanwhile, Temasek's withdrawal announcement also occurred a day before the general meetings of Sembcorp Industries and Sembcorp Marine, where parties will work out an agreement and disclose if stockholders have given their go signal for dissolution of SembMarine from its mother company.
