Somerset Issues Scheme Document For Proposed Merger With Ascott
The scheme document for Somerset Holdings' proposed merger with The Ascott Limited has been despatched to Somerset shareholders today (Oct 3).
Under the proposed scheme, Somerset will become a wholly-owned subsidiary of Ascott and each Somerset share will be exchanged for 0.93 Ascott shares. When the merger becomes effective, Ascott shares (including the new Ascott shares to be issued to existing Somerset shareholders) will remain listed on the SGX-ST, and Somerset shares will be delisted.
Somerset and Ascott are proposing the merger to create the largest serviced residence company in the Asia Pacific, which will be well-positioned to expand internationally and establish global brands.
The merged company will have over 6,000 serviced residence units in 16 cities in 10 countries and a global reach spanning from Auckland, New Zealand to London, United Kingdom.
Somerset is the publicly-listed serviced residence and retail subsidiary of Pidemco Land while Ascott is a publicly-listed associated company of DBS Land.
A court meeting and an extraordinary general meeting have been scheduled for Somerset shareholders to vote on the merger on Wednesday October 25 at STI Room, 9th floor, Capital Tower, 168 Robinson Road.
At the court meeting at 3 pm, the proposed scheme of arrangement for the merger must be approved by a majority in number of Somerset shareholders, representing not less than 75 per cent in value of the Somerset shares held by the shareholders present and voting at the meeting.
At the EGM at 3.30 pm, (or soon after the court meeting is concluded or adjourned), shareholders will need to pass a special resolution to approve and give effect to the scheme by a majority of not less than 75 per cent of the votes cast in person or by proxy.
The last day for shareholders to lodge proxy forms for the court meeting and for the EGM is Monday, October 23.
Implementing the Scheme
Ascott shareholders will also have to approve the merger, the increase in Ascott's authorised share capital, the issue of new Ascott shares and the Whitewash Waiver at an Ascott EGM on Monday October 23.
Once Somerset shareholders give their approvals at the Somerset court meeting and EGM, and Ascott shareholders give the green light at the Ascott EGM, and the Court approves the scheme and the reduction of Somerset's ordinary share capital, Ascott will allot and issue new Ascott shares, credited as fully paid-up to Somerset shareholders. Somerset shares will then be exchanged for new Ascott shares at the ratio of one Somerset to 0.93 Ascott shares.
Entitlements to the new Ascott shares will be based on Somerset shares credited to the securities accounts of Somerset shareholders or appearing in the Register of Members of Somerset at 10 pm on the books closure date, being tentatively Friday December 1.
Following the merger effective date, which is expected to be on Saturday December 2, the CDP will debit from each relevant securities account, the depositor's holding of Somerset shares and credit the relevant new Ascott shares. CDP will then send a statement to the shareholder confirming the number of new Ascott shares credited to his securities account.
Trading in Somerset shares on the SGX-ST will tentatively cease on Nov 29, being the third market day before the books closure date. Somerset shares will cease to be traded on the SGX-ST from Dec 4, the first market day following the effective date of the merger. Existing "Somerset shareholders" would then be trading with their new Ascott shares.
Rationale for merger
* Unique opportunity to become a dominant serviced residence company in the Asia Pacific
Somerset and Ascott have the vision of becoming a dominant global serviced residence company. The merger is a unique opportunity to consolidate size, strong brand presence and resources for greater market dominance in the cities in which both companies operate.
In most of its existing markets, the merged company will become a significant player, with an increased customer base and enhanced competitive advantage.
With about $1.07 billion in serviced residence assets, the merged group can exist as a pure play serviced residence business and seek growth through market dominance and geographical diversification rather than product or business diversification. As a focused service residence company, it can also respond more effectively to the industry's unique market drivers, risks and success factors.
* Larger platform to expand internationally and to launch new initiatives
With over 6,000 units in 16 cities, the merged group will be in a better position to expand internationally, while its larger asset base will provide the critical mass and international presence to establish global brands.
The merged group will also have a stronger platform from which to negotiate third party management contracts and attract new opportunities and alliances.
* Operational synergies and economies of scale
With the merger, economies of scale, synergies and greater operational efficiencies can be realised. The merged group can achieve improved cost management through bulk procurement, cross marketing, centralised sales and clustering its properties.
* Increased market capitalisation, improved liquidity, greater investor interest
The merged group will have a significantly larger market capitalisation which should improve the liquidity and float of its shares, resulting in greater international investor interest.
* Stronger capital base and enhanced financial strength
The merged group's larger balance sheet should improve access to debt and capital markets, enabling the tapping of funds at lower costs. The merged group's net tangible assets of about $1.26 billion at June 30, 2000 will also provide a larger financial base to grow the business.
Somerset Holdings' Proposed Merger with The Ascott
Ida Lim, Vice President
Investor Relations & Corporate Communications
Tay Cheng Cheng, Assistant Manager
Investor Relations & Corporate Communications
Somerset Holdings Limited
8 Shenton Way, #13-01