Morgan Stanley rejects Khazana's Parkway bid as 'not compelling'

Morgan Stanley said Khazanah's offer is reasonable but not compelling as $3.78/share bid below average for Singapore takeovers.

Malaysian state investor Khazanah's $835 million partial takeover bid for Singapore healthcare firm Parkway Holdings is reasonable but not compelling, the independent adviser said on Wednesday.

Khazanah said in May that it intended to raise its stake in Parkway, Asia's largest healthcare operator by market capitalisation, to 51.5% from around 24%, pitting it against India's Fortis, which currently controls Parkway with about 25% of the shares.

Morgan Stanley said that while Khazanah's offer price of S$3.78 ($2.72) was much higher than Parkway's average share price in the 12 months preceding the offer, it was just 6.5% above the average price target of S$3.55 set by analysts covering the stock.

"There is no certainty that shareholders will receive the offer price," the U.S. bank added, noting Khazanah was only making a partial bid for 313 million shares, or about 27.6% of Parkway's total issued shares.

"The premia implied by the offer price are below the average and median premia over 1-month, 3-month and 6-month periods for selected Singapore precedent offers involving the acquisition of controlling stakes since Jan 1, 2007," Morgan Stanley said.

View the full story in Reuters.