SIA draws its Tiger cub into the fold

SIA draws its Tiger cub into the fold

Singapore - SINGAPORE Airlines (SIA) is scooping up the rest of Tiger Airways and seeking to align the budget carrier more closely with the broader SIA group, marking the end of Tiger's chapter as a listed company.

The offer period closed on Friday, following several extensions and a revision to the offer price from 41 Singapore cents to 45 cents a share, after the Securities Investors Association (Singapore) lobbied on behalf of the budget carrier's unhappy minority shareholders. Tiger was listed at S$1.50 per share.

On Feb 26, SIA announced that it owned, controlled or had agreed to acquire 95.6 per cent of Tiger, making it eligible to mop up the carrier's outstanding shares that it didn't already own.

Airline chief Goh Choon Phong said in a statement on Friday: "With full ownership of Tiger Airways, we will be able to fully integrate it within the SIA group, strengthening Tiger Airways' future growth prospects."

The group has already said it is considering connecting traffic or interlining flights from its premium airlines such as SIA, onward to other points served by Tiger. SIA and regional wing SilkAir have already started connecting to select points on the network of Scoot, its subsidiary airline.

Shukor Yusof, the founder of Endau Analytics, said: "Gaining full control of Tiger gives SIA a quicker way - for the next five years at least - to execute its strategy for the group, which is foremost to integrate and absorb the low-cost carrier into its multiple-brand fold.

"The discount segment is key to SIA's mid- to long-term growth and I'd imagine Tiger might be melded with Scoot within the next 18 months as part of a rationalisation programme."

Shareholders who had not responded to the offer by Friday's close will receive a letter on the compulsory acquisition of their shares in due course, SIA said in the statement.

SIA's revised offer represented a premium of 45 per cent over the last traded price before the take-over was announced; it values Tiger at about S$1.125 billion.

Shareholders are also given the option to take part in Tiger's future growth by subscribing to SIA shares at S$11.1043 a share.

Most analysts appeared in favour of the deal, given that Tiger's financial performance has been hit by a double whammy of overcapacity in South-east Asia and bleeding joint ventures overseas.

Mr Yusof added: "Expect to see Tiger grow significantly once its financials stabilise - and it will under the close control of SIA's management - to the extent that it would even expand its fleet to mount a real fight against the likes of AirAsia and Lion Air."

Shares in SIA closed at S$11.36, down 1.9 cents, on Friday; the Tiger counter lost a cent to close at 46 cents.

This article was first published on March 7, 2016.
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