Silverlake Axis Voluntary Unconditional Offer

Silverlake Axis ("SLA") announced it received a voluntary unconditional offer today [here].  Existing shareholders can choose between receiving 36 Singapore cents in cash per share, or a combination of 30 Singapore cents in cash and one new redeemable preference share (RPS)  The RPS will be redeemed in five years' time at an amount of 18 Singapore cents.

The cash offer represents a 20 per cent premium over the last traded price of S$0.30.  On the other hand, the NPV of the cash and RPS combination represents a 52 per cent premium over the last traded price, based on my back-of-the-envelope calculations.

It is sad that this financial software company is going to be delisted.  I can understand the rationale for the privatisation, as SLV's share price has been languishing for years now.

I will probably take the cash offer for my SRS portfolio, but the combination of cash and RPS for my CDP portfolio.  I see no replacement counter in the near term, so I will opt for the higher return in my CDP.

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