Professional Documents
Culture Documents
This is the abridged version of a case prepared by Chew Yi Ling, Goh Theng Hoon and Thomas Sim Joo Huat
under the supervision of Professor Mak Yuen Teen. The case was developed from published sources solely for
class discussion and is not intended to serve as illustrations of effective or ineffective management.
Consequently, the interpretations and perspectives in this case are not necessarily those of the organisations
named in the case, or any of their directors or employees. This abridged version was prepared by Koh Kian Sin
under the supervision of Professor Mak Yuen Teen.
Copyright © 2012 Mak Yuen Teen and CPA Australia
6
C.K.Tang: The Fight towards Privatisation
In 1975, C.K. Tang was listed on the then Singapore Stock Exchange,
which later became the Singapore Exchange (SGX)3. However, since
2003, the Tang family had been trying to delist and privatise the
company4. After two failed attempts, the Tang family finally succeeded
and the company was delisted on 24 August 20095.
In 2011, C.K. Tang made an offer to about 500 minority shareholders who
had held on to the shares of the delisted company. This offer represented
a 15 per cent premium over its fair value and well above the price offered
to other shareholders for the delisting in 2009. However, some of these
minority shareholders were still unwilling to take up the share buyback
offer, and were holding out for a better offer 6.
Board of Directors
During the third and successful privatisation attempt, the board of C.K.
Tang was chaired by Ernest Seow, a former PricewaterhouseCoopers
(PwC) partner. Apart from Seow, there were three other directors with
experience in accounting, business management and the retail
industry. Among the four directors, three of them were serving as non-
executive independent directors.
During the company’s history, there was at least one Tang family member
on the board7. However, in 2008, Tang Wee Sung, CEO and the majority
shareholder of the company since 1987 8, stepped down from the board,
after he was alleged to be involved in an illegal organ trading scandal.
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C.K.Tang: The Fight towards Privatisation
With this development, for the first time in the company’s history, there
was no Tang family member on the board.
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C.K.Tang: The Fight towards Privatisation
Shareholders also reproached the directors for failing to clarify with the
Tangs about their redevelopment plans for Tangs Plaza after its
privatisation. They expressed disappointment with the independent
directors, saying that they had insufficiently analysed the issue.
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C.K.Tang: The Fight towards Privatisation
Doubts were raised about the independence and neutrality of the CEO
of the company at the time, Foo Tiang Sooi, because he was
personally related to Tang Wee Sung. Foo had worked under Tang
from 1999 to 2006. He and Tang were also former schoolmates 25.
However, he dismissed these facts as irrelevant 26. Foo also added that
he was related to the shareholder who posed the question, but this fact
was irrelevant as well27.
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C.K.Tang: The Fight towards Privatisation
PwC stated that the property was valued at S$340 million on 25 May
200934. This was much lower than other nearby sites. In contrast,
minority shareholders contested that the site was easily worth at least
S$400 million, according to an independent valuer. This value did not
take into account the potential value arising from redeveloping the site,
and did not consider the potential value from sub-dividing the site into
small retail units and leasing them to specialty tenants 35. The board,
however, stated that regulators had told the directors that any such
redevelopment was not applicable36.
Ten shareholders had also signed a petition to SGX and the Ministry of
Finance questioning the basis of the valuation on the property’s
“existing use”40, in a bid to convince the regulators to allow them to
obtain an alternative valuation report41. SGX’s reply was that C.K.
Tang’s move to delist was purely commercial, and that the company
had complied with the listing and delisting rules42.
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C.K.Tang: The Fight towards Privatisation
Discussion Questions
1. In cases of companies where there are controlling shareholders,
explain why the interest of controlling and minority shareholders
may diverge, using the CK Tang case as an example.
2. Should independent directors be primarily concerned with the
interests of the minority shareholders?
3. Evaluate the independence of C.K. Tang’s board during the third
privatisation attempt. Do you think this affected the actions of the
board during the privatisation process?
4. Do you believe that the basis of valuation was fair? Explain.
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C.K.Tang: The Fight towards Privatisation
Endnotes:
1
Lee, S.S. “No Tangs for the Memories.” 2 August 2009. The Straits Times.
Online. Factiva. 24 March 2010.
2
Ng, Baoying. “Move to delist CK Tang passed despite protest by minority
shareholders”. 31 July 2009. Channel NewsAsia. 20 March 2010.
<http://www.channelnewsasia.com/stories/singaporebusinessnews/
view/446038/1/.html>
3 Yahya, Yasmine. “CK Tang offers 83 Singapore Cents Per Share to
delist from SGX”. 8 May 2009. Channel Newsasia. 17 December 2011.
<http://www.channelnewsasia.com/stories/singaporebusinessnews/
view/427860/1/.html>
4 Lee, S.S. “No Tangs for the Memories.” 2 August 2009. The Straits Times.
Online. Factiva. 24 March 2010.
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C.K.Tang: The Fight towards Privatisation
14 Ibid.
15 Ibid.
16 Lee, S.S. “Second offer for CK Tang fails to get enough support.”
3 February 2007. The Straits Times. Online. Factiva. 24 March 2010.
18 Ibid.
21 Ibid.
22 Lee, J. “Bid to delist CK Tang hits another road block.” 18 July 2009.
The Business Times. Online. Factiva. 24 March 2010.
23 Lee, S.S. “No Tangs for the Memories.” 2 August 2009. The Straits Times.
Online. Factiva. 24 March 2010.
26 Ibid.
27 Ibid.
28 Ibid.
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C.K.Tang: The Fight towards Privatisation
35 Teo, J. “CK Tang urged to work out offer price with investors.” 30 July 2009.
The Straits Times. Online. Factiva. 24 March 2010.
36 Lee, J. “CK Tang going private, 34 years on”. 1 August 2009. The
Business Times. Online. Factiva. 24 March 2010.
37 Lee, J. “CK Tang undervalued, claim some shareholders.” 14 July 2009.
The Business Times. 24 March 2010
38 Lee, J. “CK Tang going private, 34 years on”. 1 August 2009. The
Business Times. Online. Factiva. 24 March 2010.
39 Ng, Baoying. “Minority shareholders of CK Tang to appeal de-
listing proposal to SGX, MAS”, 13 July 2009. Channel Newsasia.
20 March 2010 <http://www.channelnewsasia.com/stories/
singaporebusinessnews/view/442135/1/.html>
40 Lee, J. “CK Tang undervalued, claim some shareholders.” 14 July 2009.
The Business Times. 24 March 2010
41 Chow, K. “CK Tang independent directors explain valuation method.”
15 July 2009. Today (Singapore). 24 March 2010.
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C.K.Tang: The Fight towards Privatisation