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June 30, 2000 VOL. 29 NO. 25 | SEARCH ASIAWEEK

Illustration by Simon Wan

But Other Suitors Are Waiting

Shareholder meetings in Asia are usually cordial affairs. It is rare to see angry owners of a company's stock grilling managers or directors like they do in the U.S. But that wasn't the case on June19 in Singapore. Of course there was no outright hostility, but there was a behind-the-scenes battle when the stock brokerage Vickers Ballas called a general meeting to seek shareholder approval of its merger with G.K. Goh, Singapore's largest securities firm.

On one side was the reclusive tycoon Ong Beng Seng, who controls about 20% of Vickers Ballas's shares and wanted a higher price for them. On the other, one of the island-republic's most powerful women, Madam Ho Ching, whose Singapore Technologies owns 40% of Vickers. As the wife of Deputy Prime Minister Lee Hsien Loong and daughter-in-law of Senior Minister Lee Kuan Yew, she is closely aligned with the government, which had been pushing the merger as a way to prepare local firms for increased global competition. Neither Ong nor Ho made an appearance at the meeting.

In earlier newspaper ads Ong argued that the deal substantially undervalued subsidiary Vickers Capital and would cheat shareholders out of millions of dollars. With no independent financial advisers on either side to evaluate the deal, Ong argued it was difficult to determine Vickers' actual worth. He also bridled at the lack of discussion at the meeting or any other consultation with shareholders. Conventional wisdom holds that because Singapore is such a small place, a compromise would be reached. Not this time.

Enough votes sided with Ong to block the deal, which, under Singapore law, needed to be endorsed by 75% of the shareholders. CEOs of both companies bemoaned the lost opportunity, holding that consolidation was in everyone's interest. But new suitors are already calling -- among them, Prudential-Bache Securities for Vickers and Charles Schwab for G.K. Goh. Whatever the outcome, Ong has shown that minority shareholders -- especially influential ones -- should not be taken for granted.

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