The battle of Wheelock and SC Global should be more correctly described as the poker game battle of Wheelock and Simon Cheong.
In what has become a spanner in Simon Cheong’s privatisation plan of SC Global, Wheelock purchased shares in SC Global at a price of S$1.81 last week.
This was $0.01 above the $1.80 offer price of Simon Cheong.
It might only be a mere $0.01, but it’s pretty symbolic.
First of all, the purchase of shares at a price higher than the offer price is a signal of outright rejection by Wheelock to Simon’s offer. Therefore, Simon’s plan to take full control of the company is not going to happen unless he raises his offer price.
Secondly, the price of SC Global reacted to the Wheelock news and has gone up sharply. At the time of this post, it is trading at around $2.07.
This means that any sane person will not accept the $1.80 offer. After all, he can sell his shares on the secondary market and get a better price. It also means that Simon Cheong is unable to buy more shares on the secondary market as he can only pay a maximum of $1.80 for the shares (unless he raises his offer).
If nobody accepts Simon’s offer and he can’t buy any more shares on the market, delisting is just not only to happen. One way it can happen is to increase the offer price until Wheelock is happy.
If Simon is desperate enough to want to take SC Global private, he might very well have to raise his offer price, at least to a level above what it is currently trading at. Otherwise, SC Global will stand to lose a sum of money to the government to pay for extension charges.
SC Global could lose $72m if privatisation bid fails (Straits Times)
However, if SC Global does indeed lose money over paying the extension charges, Wheelock, as a substantial shareholder, will also stand to lose as well.
So, who will blink first in this poker game?