The Tang brothers' move to consolidate holdings in CK Tang, a Singapore retail icon, to bolt down succession plans has triggered a cash offer for roughly 2 per cent of shares that they do not own. In doing so, the brothers have made public that they do not intend to create a Reit (real estate investment trust) for the department store property.
An offer document published on Thursday showed Tang Holdings acquired the 98.2 per cent of shares held by several parties including Tang Wee Kit, who runs Tang Holdings, and Kerith Holdings, which is controlled by Tang Wee Sung.
Tang Holdings is required by regulations to extend the same offer to the remaining shareholders in CK Tang, and so has offered to buy them out at S$0.35 per share. The Business Timesunderstands that the offer was meant mainly to satisfy regulatory conditions. The offer document also stated Tang Holdings will not increase the offer price.
"A family succession planning exercise was undertaken by Tang Wee Kit and Tang Wee Sung in May 2006 to ensure that shares held by the brothers. . . which constituted the Tang family assets, remained in the family," the offer document said.
"Tang Wee Sung has decided that the final step to complete the family succession planning exercise is appropriate at this time, hence the sale of shares by the brothers either personally or through their respective vehicles to the offerer (Tang Holdings)."
This comes as Tang Wee Kit's eldest son, Sean Tang, is said to be groomed for leadership. The younger Tang, who is in his early 30s, was last reported in 2015 to be focused on operations at Tang Plaza, which houses the flagship CK Tang store and the Singapore Marriott Tang Plaza Hotel. He has three other younger siblings. Mr Tang Wee Sung, who oversees the retail business, has no children, and is said to be channelling more time towards charitable works.
This would be the fifth official buyout offered to minority shareholders, who have held on to their shares on hopes that the family would offer a bigger bounty.
The offer of 35 Singapore cents per share is a 77 per cent discount to CK Tang's net tangible asset value of S$1.54 as at March 2015.
This is also significantly below the offer of S$2 per share that CK Tang and the brothers offered to minority shareholders in 2011 through a capital reduction exercise. CK Tang then offered to cancel the remaining shares held by minority investors at S$1.30 apiece - a price then that was a 15 per cent premium to the company's fair value. The Tangs then offered "goodwill" of additional 70 cents per share - or S$3.1 million in total - that they would pay from their pockets if these shareholders voted in favour of the capital reduction. This offer was rejected.
As it is, this followed two failed delisting attempts, and the third successful privatisation in 2009.
The attempts to buy out the minority shareholders were emotionally charged affairs, as long-term shareholders, some of whom carried yellowed reports bound by raffia string to shareholder meetings, challenged the board over plans to redevelop the property, and raise the asset value, from which a buyout price is derived.
Despite challenging times for the retail and hospitality business, Tang Holdings stated in the offer document that it will continue its existing business activities. It has no plans to introduce "any major changes" to the business, re-deploy fixed assets of the company, or to retrench staff.
"In particular, the offerer has no intention of discontinuing the traditional retail business, disposing of portions of the (Orchard) property. . . redeploying the department store property, or entering into any arrangement for a real estate investment trust in respect of the department store property."
CK Tang was started by Tang Choon Keng, who had arrived to Singapore from China's Swatow in 1923. He built his business up from selling Chinese lace, and was famous for closing the retail store on Sundays due to his staunch Christian beliefs - he wanted his family and Christian staff to attend church. Mr Tang Wee Sung overturned this tradition in 1996.
This article was first published on May 6, 2016.
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