The state-backed investor, which already owns about one-fifth of Keppel, offered to buy an additional 30.6% stake at S$7.35 a share, according to a statement Monday.
That’s 26% higher than what Singapore-based Keppel traded at before its shares were halted, pending the announcement.
Becoming the majority owner of one of the world’s biggest oil-rig makers would be seemingly at odds with Temasek’s preference to steer away from fossil fuels; the firm decided against investing in Aramco’s IPO in part over environmental concerns.
But taking over Keppel could open a variety of profitable merger, acquisition and divestment options that may help improve the builder’s financial and environmental sustainability amid falling revenue and rising capital demands.
“The partial offer reflects our view that there’s inherent long-term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook,” Temasek International President Tan Chong Lee said in a statement.
Temasek’s offer for the additional interest in Keppel could make a merger between Keppel’s offshore and marine unit and rival Sembcorp Marine Ltd easier, Joel Ng, an analyst at KGI Securities Co said.
It would allow the consolidation of Singapore’s two largest shipyards to proceed, he added in a note to clients.
Sembcorp Marine
“Temasek is already a major shareholder of Sembcorp Marine, and after this, they will become a major shareholder of Keppel making any merger easier,” he said.
Sembcorp Marine rose as much as 12%, while its parent Sembcorp Industries Ltd jumped as much as 9.6%.
Temasek said it plans to keep Keppel traded on the Singapore stock exchange.
Keppel also has businesses involved in real estate and infrastructure, and the entire company is subject to a “comprehensive strategic review” with the objective of creating “sustainable value” for shareholders.
That shakeup could lead to new directors on its board, Temasek said in its statement.
Morgan Stanley is acting as Temasek’s sole financial adviser.