OCBC, Great Eastern on verge of UE, WBL sale
Joint pre-market exchange filing mentions unnamed shortlisted bidder
OCBC Bank and Great Eastern Holdings are in the final stages of discussions to sell their combined stakes in engineering and property development firm United Engineers (UE) and one of its units.
They have shortlisted a bidder for their holdings in UE and WBL Corp, they said in a joint pre-market exchange filing yesterday.
Although the bidder was not named, Perennial Real Estate Holdings, which said last month it had submitted an offer, requested a trading halt in the morning.
China developer Yanlord Land Group also called for a trading halt but declined to comment on speculation that it may be involved in the bid.
UE shares were also suspended from trading yesterday.
Bloomberg reported that a consortium that includes Perennial and Yanlord plans to announce an agreement as soon as today to buy the stakes.
The consortium plans to make an offer for the rest of UE, said Bloomberg, citing sources.
They said this was after clarifying with Singapore's takeover council on the procedures for a simultaneous bid for the two companies.
OCBC Bank, Great Eastern and the bank's founding Lee family hold a combined stake of at least 30 per cent in UE, which has a market cap of $1.73 billion.
Under Singapore rules, the buyer of their stake has to make a mandatory takeover offer for the rest of UE.
Several names, including private equity firm KKR & Co and Singapore government-owned development group Ascendas-Singbridge, were reportedly among those shortlisted to make final bids for UE.
They are likely at a stage where they cannot extract more value from their assets.Religare Capital Markets director of global special situations, Mr Justin Tang, on major shareholders of UE
UE is one of Singapore's oldest companies, with interests in property, engineering and distribution, technology and manufacturing.
It has been selling non-core businesses and assets, such as Singapore luxury car distributor Wearnes, to focus more on property.
It developed the mixed-used UE BizHub City - formerly known as UE Square - Orchard Gateway and projects in China. It also owns Rochester Mall and UE Square Shopping Mall, and has a stake in Seletar Mall.
On the back of its full-year results, UE had noted: "Rental income from the group's portfolio of investment properties will help reduce this volatility, but the group is likely to face downward pressure on rental income in Singapore, given the growing supply of office, industrial and retail space amid softening demand."
Major shareholders of UE have been said to be mulling over block sales of their stakes for weeks now, and analysts are not surprised.
Mr Justin Tang, director of global special situations at Religare Capital Markets, had previously said that with the Straits Times Index at a high, "They are likely at a stage where they cannot extract more value from their assets."
No agreement has been entered with the shortlisted bidder, said OCBC Bank and Great Eastern yesterday.
"In the event any transaction in respect of their combined stakes in UE and WBL were to materialise, such a transaction is not expected to have a material impact on the earnings of OCBC Bank and Great Eastern," they said in the joint statement.