Sunday 5 March 2023

Accounting for Keppel Corp’s disposal of Keppel Offshore & Marine

Sembcorp Marine acquisition of Keppel Offshore and Marine (O&M) was great news for Keppel Corp shareholders. I was please seeing Keppel Corp go asset light and cutting off their O&M business. But this whole scheme of things was so complicated! I had a really hard time trying to account for this transaction.

The proper way to account properly on paper was to do the following:
a) Sell Keppel Corp at $7.34, which is its closing price on 22 Feb 2023;
b) For every 1 unit Keppel Corp owned on 22 Feb, buy 19.085033835 units of Sembcorp Marine at $0.134, its closing price on 22 Feb 2023; and
c) Buy back the exact number of units of Keppel Corp you sold at $4.7826. ($4.7826 because it is the adjusted-for-distribution price; $7.34-(19.085033835*$0.134))

But because I want to track when my different tranches of Keppel Corp transactions will be freehold, I had to use a different method. Since I sold off my Sembcorp Marine stocks on the very first day (i.e. 1 Mar 2023), I could use the value of that sold transaction for this accounting. I treated the value of the sold transaction as cash dividends and accorded them to my Keppel Corp holdings. 


The flaw is that my dividends recorded in stockcafe is now inflated by this. I need to mindful and remember to take note of this. 

Which method did you use to account for this or did you use other methods? 

1 comment:

  1. Was tinking to put it under dividends too but like overinflate quite a bit. So i nett off my Sembcorp marine proceeds from the cost price of my Kep Corp shares.

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