All Hail Temasek 2: Electric Boogaloo

Chartered Semiconductor – and its multi-billion-dollar losses for Temasek – have appeared previously on JRE.

But now there’s great news for Temasek, and for its esteemed CEO Ho Ching. The sovereign wealth fund of Abu Dhabi has agreed to pay a stupendous $2.5 billion (USD 1.8 bilion) to buy the whole of Chartered Semi, lock stock and barrel.

So that’s $2.68 SGD per share, and surely there’s a hefty takeover premium priced into that, right? The other big M&A deal announced today – Kraft’s takeover bid for Cadbury – came with a 31% takeover premium. So, what’s the takeover premium for Chartered Semi?

Two cents. Two-thirds of one percent.

Doesn’t the board of Chartered Semi have some sort of duty to extract the maximum possible takeover premium for its shareholders? But then again, Chartered Semi has only turned a profit in three out of the last ten years – and one of those years was 2000, the peak of the tech bubble. They’re probably lucky they got two cents.

And Temasek’s net loss on the whole Chartered debacle, over the eleven years since the float? A cool $15 billion – fifteen billion dollars of the Singaporean public’s money.

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