SINGAPORE (July 20): SMRT has received an offer of privatisation from state-owned investment holding company Temasek Holdings.

Belford Investments, a wholly-owned subsidiary of Temasek, is offering S$1.68 in cash for each share, representing a 9.1% upside to SMRT’s last traded price of S$1.54 on July 15.

With an outstanding issued share capital of about 1.53 billion shares, the offer price values SMRT at about S$2.6 billion.

“Privatisation will provide SMRT with greater flexibility to focus on its primary role of delivering safe and high quality rail service, without short term pressures of being a listed company, in the midst of its transition to a new regulatory framework under the New Rail Financing Framework,” say SMRT and Temasek in a joint filing.

There will be no special dividend arising from sale as net proceeds received will substantially be used to pay part of its debt of S$762 million as at end September, and to support re-investment needs of SMRT.

Shareholders however will be entitled to the final dividend of 2.5 cents a share for FY16.

The sale will require the approval of minority shareholders. Temasek currently has a 54% ownership stake in SMRT.

Credit Suisse has been appointed financial advisor for Temasek, while the Bank of America Merrill Lynch will be advising SMRT in the deal.