Great Eastern Delisting Rejection: A Watershed for Minority Shareholders and OCBC's Strategic Crossroads

The recent rejection of Great Eastern Holdings' (GEH) delisting proposal marks a pivotal moment in corporate governance in Singapore. After nearly two decades of efforts by its parent company, Oversea-Chinese Banking Corp (OCBC), to fully acquire the insurer, minority shareholders decisively blocked the move—a decision that underscores evolving dynamics in shareholder rights and raises critical questions about OCBC's strategic priorities.

The Delisting Rejection: A Vote for Minority Power

On July 8, 2025, GEH's Extraordinary General Meeting (EGM) saw minority shareholders reject the proposed delisting by voting down the conditional exit offer of S$30.15 per share. To pass, the resolution required 75% approval from non-OCBC shareholders, but only 63.49% supported it. This outcome reflects a growing assertiveness among minority investors, particularly after an 11-month trading suspension that left shareholders unable to liquidate their stakes.

The rejection highlights two key factors:
1. Shareholder Frustration with Timing and Terms: The offer, while revised from S$25.60 in July 2024, was perceived as insufficient by many. With OCBC's economic stake rising to 93.72% post-rejection, shareholders likely viewed the deal as unfair given GEH's role as a cornerstone insurer in Southeast Asia.
2. Activism's Impact: Prominent shareholder advocate Ong Chin Woo's vocal support for minority rights galvanized opposition. His characterization of the vote as “historic” underscores a broader shift toward holding corporate giants accountable to smaller stakeholders.

OCBC's Revised Offer: A Financial Viability Analysis

OCBC's revised offer of S$30.15 represented a 17.7% increase over its 2024 bid. While an independent financial adviser called it “fair and reasonable,” critics argue it undervalued GEH's long-term growth potential.

• Valuation Metrics: At the time of the offer, GEH's price-to-book (P/B) ratio stood at 0.9x, below regional peers like AIA (AIA.HK) at 1.5x. This suggests the offer may have discounted GEH's brand strength and market dominance in Singapore and Malaysia.
• Discount to Pre-Suspension Prices: Before the trading halt in July 2024, GEH shares traded near S$32. The revised offer's S$30.15 represented a 6% discount, further fueling shareholder dissatisfaction.

The alternative plan—issuing Class C non-voting shares—adds complexity. These shares, with a liquidation preference of just S$0.10 and no voting rights, are structurally inferior to ordinary shares. While OCBC's economic stake remains near 94%, its voting power drops to 88.19%, a concession that could complicate future corporate actions requiring shareholder approval.

Strategic Implications for OCBC

The failed delisting ends OCBC's two-decade pursuit of full ownership but leaves it with an enhanced economic stake. Key strategic considerations include:
1. Operational Synergies: OCBC's deepened control may accelerate integration of GEH's insurance operations into its broader financial services network, potentially boosting cross-selling and cost efficiencies.
2. Regulatory Risks: The Singapore Exchange (SGX)'s free-float requirement remains a hurdle. If minority shareholders disproportionately choose Class C shares, triggering a free-float drop below 10%, GEH could face renewed delisting threats or forced share placements.
3. Investor Sentiment: OCBC's shares have underperformed the STI in recent months, partly due to uncertainty around GEH's future. Resolution of the free-float issue may provide a near-term catalyst for recovery.

Investment Takeaways

1. Hold GEH Shares with Caution: While GEH's shares may resume trading soon, the Class C share structure creates asymmetry between economic and voting power. Investors should assess their risk tolerance for illiquid or disadvantaged securities.
2. OCBC's Long-Term Play: OCBC's strategic focus now shifts to leveraging its enhanced stake without further acquisitions. Investors bullish on Southeast Asia's financial sector may find value here, provided OCBC executes synergies effectively.
3. Monitor Free-Float Dynamics: If Class C shares are widely accepted, GEH may face another crisis. Investors should track SGX compliance updates and minority shareholder behavior closely.

Final Verdict

The GEH delisting saga is a landmark case study in balancing corporate ambition with shareholder democracy. For OCBC, the path forward requires navigating regulatory constraints while maximizing the value of its 93.72% economic stake. For minority shareholders, the victory reinforces the power of collective action—a lesson likely to reverberate across Singapore's corporate landscape.

Investors are advised to proceed with caution, prioritize liquidity, and remain vigilant for developments that could reshape this complex scenario.