Singapore’s Temasek Holdings is terminating its $3 billion conditional offer for conglomerate Keppel Corp by invoking a material adverse change (MAC) clause following the company’s poor financial results.
After Keppel reported a large second-quarter loss that breached a threshold in the state investor’s offer to buy control of the company, Temasek had said it would make a decision by Aug. 31.
Temasek’s decision to drop the bid is likely to surprise markets as analysts had expected Temasek to lead consolidation in the rig building sector after taking majority control of embattled Keppel.
“The offeror has decided that it will invoke the MAC pre-condition, and accordingly, is announcing today that the partial offer will not proceed,” a holding company of Temasek said in a Singapore bourse statement on Monday, a public holiday.
Last October, Temasek offered to increase its one-fifth stake in Keppel to 51%.
Keppel, whose businesses range from property development to rig-building, swung to a net loss of S$697 million ($507 million) for April to June, from a net profit of S$153 million a year earlier – its biggest quarterly loss in at least 15 years, Refinitiv data showed.