UOL makes bid for UIC

http://www.straitstimes.com/Breaking...ry_326016.html

Jan 14, 2009

UOL makes bid for UIC


UOL Group , a property firm controlled by United Overseas Bank Chairman Wee Cho Yaw, on Wednesday offered to buy United Industrial Corp (UIC) in a deal that values UIC around S$1.6 billion.

UOL, which currently controls 30.2 per cent of UIC, will pay $1.20 for every UIC share it does not own, according to a filing on the Singapore Exchange.

That represents a premium of 9.1 per cent over UIC's last traded price of $1.10 a share. The shares were suspended earlier on Wednesday.

David Lum, an analyst at Daiwa Institute of Research, said it appeared UIC's major shareholders believed the company to be significantly undervalued.

'Do I see that happening in other companies? Yes. If you know the intrinsic value of your assets, which has been grossly undervalued in the market, you could acquire those assets,' he said.

Shares in UIC, which is part-owned by the Wee family, have fallen from a 12-month high of $3.17 in June last year.

UOL owns various properties in Singapore, Malaysia, China, Australia and Myanmar as well as the firm that manages the Pan Pacific hotel chain. Its current market capitalisation is around $1.75 billion.

'As the principal activities of the UOL Group and the UIC Group are substantially the same, UOL is of the view that the offer represents an opportunity to better align the strategic objectives' of the two firms, UIC said in the filing.

UIC's main asset is its 72.4 per cent stake in another listed company called Singapore Land (SingLand) , which owns various office and retail properties including Singapore's Marina Square shopping mall.

According to UOL, it will be required to make an offer for SingLand at $3.57 a share if or when its offer for UIC becomes unconditional. SingLand shares were last traded at $3.42 apiece.

UOL is being advised in its takeover bid by United Overseas Bank, DBS and ANZ. -- THOMSON REUTERS

http://www.businesstimes.com.sg/sub/...14220,00.html?

Published January 15, 2009

Gokongwei factor lurks as UOL bids for UIC

Filipino tycoon's stance may influence fate of takeover offer

By UMA SHANKARI


(SINGAPORE) Wee Cho Yaw's UOL Group has made a $1.15 billion offer for all shares it does not own in United Industrial Corp (UIC).

The offer - for $1.20 a share - values UIC at around $1.65 billion. UOL might also make an offer for UIC-controlled Singapore Land in the future, it said.

UOL made the mandatory cash offer after the stake in UIC held by the group and its related parties crossed the 30 per cent mark to 30.2 per cent. The offer price is 9.1 per cent higher than UIC's last transacted price of $1.10 per share on Tuesday, Jan 13 - but some 51.6 per cent lower than UIC's net asset value per share of $2.48 as at Sept 30, 2008.

The offer is conditional upon the offerer and parties acting in concert with it holding more than 50 per cent of voting rights in UIC at the offer's close.

UOL's offer for UIC may also lead to a mandatory takeover offer for SingLand if UOL gains control of more than 50 per cent of UIC. UIC owns about 72 per cent of SingLand. If that happens, UOL will make an offer of $3.57 for each SingLand share, it said.

The offer price is based on the simple average of the daily volume weighted average traded prices of SingLand shares for the latest 20 trading days prior to yesterday's announcement.

UOL's takeover bid comes about three years after Filipino tycoon John Gokongwei made a takeover offer for UIC after his shareholding in the company crossed the 30 per cent mark. The October 2005 bid failed, but Mr Gokongwei now holds a deemed stake of 35.1 per cent in UIC and his JG Summit Holdings is the single largest individual shareholder in the company.

UOL said that the offer represents an opportunity to 'better align the strategic objectives' of UIC and UOL. UOL and UIC have joint investments in retail commercial and hotel projects. In addition, the two companies are jointly developing residential projects in Singapore. Said UOL: 'If UOL is able to obtain a majority shareholding in UIC, the UOL Group will be able to streamline the interests of both groups in these co-investments.'

JG Summit , which is listed on the Philippine Stock Exchange, has declined to comment on UOL's bid. BT understands that the company has yet to evaluate the offer and the implications to its overseas expansion plans.

JG Summit is also cash rich. As at September 30, 2008, JG Summit had cash and cash equivalents of 7.9 billion Philippine pesos (S$247.5 million). In addition, there have been no signs that the company is looking to dispose of its shareholdings, either in the Philippines or abroad. Instead, JG Summit is in the market for fresh acquisitions and new business ventures, BT understands.

Analysts said that JG Summit and other shareholders are unlikely to sell their stakes in UIC as the offer price is not attractive enough.

Insider buying of UIC by Mr Gokongwei and other major shareholders has been very consistent throughout the last two years, said CIMB analyst Donald Chua. 'We do not expect them to sell their stakes at these valuations.'

Long-term shareholders, he said, might be better off holding onto their shares and waiting for the next property upcycle.

JPMorgan analyst Christopher Gee similarly noted that the last takeover of a major property company in Singapore - CapitaLand's bid for Ascott Group in January 2008 - was done at a premium of 43 per cent to the last traded price.

CapitaLand succeeded in taking Ascott private. While market conditions then were quite different compared to today, early 2008 was not at the peak of the property upcycle either, said Mr Gee.

Analysts here said that Mr Gokongwei is unlikely to make a counter-offer for UIC as not many shareholders are likely to sell their shares to UOL - which means that Mr Gokongwei has no incentive to make a counter-bid to prevent UOL from gaining control of UIC. But as one analyst put it: 'All this is just speculation at this point.'

And while UOL might not be able to get a large chunk of UIC shares with its offer, it could increase its stake in UIC and SingLand at a good price if some shareholders choose to exit their investments in the midst of a property downturn.

UIC also suffers from poor liquidity as more than 65 per cent of its stock is held by UOL and Mr Gokongwei. The trading liquidity of UIC shares has been low, with an average daily trading volume of about 580,000 shares over the last 12 months - which represents just 0.04 per cent of the total issued shares.

All three stocks - UOL, UIC and SingLand - were suspended from trading yesterday. Trading resumes today.

http://www.businesstimes.com.sg/sub/...14232,00.html?

Published January 15, 2009

Wee's timing may stymie Gokongwei

By SIOW LI SEN


VETERAN banker Wee Cho Yaw yesterday launched 2009's first local corporate takeover bid and, in doing so, provided much excitement to an otherwise dull market.

The gossip mill went into overdrive as market observers vied to give their two cents' worth on Mr Wee's $1.55 billion takeover offer for United Industrial Corp (UIC) and its unit Singapore Land by the UOL group.

His fans pointed to Mr Wee's perfect or lucky timing in managing to put in the offer at a low price of $1.20 per share while his rival John Gokongwei Jr is stuck at a whopping $2.85 a share. This means the Filipino tycoon has to fork out almost $3 billion if he intends to mount a competitive bid.

Takeover rules dictate that the offer has to be at the highest price that has been paid by a bidder in the last six months.

The highest price Mr Gokongwei paid for UIC in the last six months was on Aug 14 last year, when he bought 48,000 shares at $2.85 a piece. Mr Wee, on the other hand, while being among the most active buyers in 2008, managed to pay not more than $1.20 a share during that six-month period.

Mr Wee, 80, and Mr Gokongwei, 81, chairman and deputy chairman of UIC respectively, have been nipping at each other's heels for control of the property company for some 10 years now.

The tussle for UIC and its prized asset SingLand, a major office landlord with some of the most valuable real estate in Raffles Place and Shenton Way, began in 1999 when Mr Gokongwei first bought into the company after he paid $310 million to take over a stake from Indonesian businessman Liem Sioe Liong. It was seen as a rude shock to Mr Wee who at the time controlled UIC through United Overseas Bank (UOB), which owned 23 per cent. Mr Wee is UOB chairman.

Through JG Summit Holdings, Mr Gokongwei then continued buying UIC shares and now owns 34.8 per cent, ahead of UOL's 30.2 per cent.

In late 2005, Mr Gokongwei made a failed $1.09 a share bid for UIC after he amassed 30 per cent - triggering a mandatory takeover bid. But it was never seen as a serious effort because the offer price was at a discount to its then last-traded price.

With two major shareholders, considered as canny and shrewd as they come, and who probably match each other in sniffing out the best deals, UIC minorities who had hoped for a windfall from a takeover tussle have waited in vain.

Mr Wee's latest move, while panned by some analysts as a 'technical offer' - not serious and likely to receive the same fate as the 2005 failed bid - is taking place in quite a different climate.

The world is in a very bad recession and much wealth has been destroyed. Investment bankers on UOL's behalf rightly argue that the bid is sure money, not to be scorned in these uncertain times.

Mr Wee, who some have accused of trying to get UIC on the cheap, is just doing what any buyer would do: pay as little as he can get away with. And if he doesn't succeed, he can then continue to amass more UIC shares - which some think is his game plan.

UIC minorities are unlikely to see a competitive bid from Mr Gokongwei, who (while personally very wealthy) is not in the same league as Mr Wee, who is worth billions.

Not that Mr Gokongwei is short of cash. He is said to have pocketed some $233 million for his almost 30 per cent share of Leedon Heights, which was sold for $835 million in 2007 to Guoco- Land. According to a Forbes ranking last October, Mr Gokongwei was worth US$680 million. Market capitalisation of JG Summit is S$430 million and it had a debt net of cash of S$2.6 billion as at end-September 2008.

So what should UIC minorities do? They can always dream that a third party might jump into the fray though tight credit conditions will shrink the possible number of contenders.

Or they can continue to hold on to UIC shares and ride out the recession.

After all, Mr Wee's numerous fans have always done not too badly by hanging on to his coattails. In such times, they can take comfort in knowing that UIC is a valuable asset, albeit battered.

http://www.straitstimes.com/Money/St...ry_326257.html

January 15, 2009 Thursday

UOL Group makes bid for UIC

Firm controlled by Wee Cho Yaw offers $1.20 a share for stake

By Gabriel Chen


UOL Group has triggered the biggest corporate play since the financial crisis flared last year by offering to buy United Industrial Corp (UIC) in a deal that values the real estate developer at $1.6 billion.

UOL, a property firm controlled by United Overseas Bank (UOB) chairman Wee Cho Yaw, will pay $1.20 a share for the stake it does not already own in UIC, according to a filing on the Singapore Exchange yesterday.

That is a 9.1 per cent premium to UIC's last traded price of $1.10.

UOL Equity Investments - a wholly owned unit of UOL - and the relevant parties, including UOB, Haw Par Corp and Mr Wee himself, now own about 29 per cent of UIC.

Under the proposed deal, UOL Equity Investments has agreed to acquire 15.86 million UIC shares, or 1.2 per cent of the issued shares, from unnamed sellers.

This means UOL and the relevant parties will own about 30.2 per cent of UIC. As they have crossed the 30 per cent mark, they will have to make a mandatory general offer with the aim of reaching a controlling stake of more than 50 per cent.

UOL and UIC clearly have areas of common interest, and a merger could spell dividends.

The jewel in the UIC crown is its 72.4 per cent stake in listed property group Singapore Land (SingLand), which owns various office and retail properties, including the Marina Square shopping mall.

UOL has a stable of properties in Singapore and abroad, including Odeon Towers, Faber House, Novena Square, United Square, as well as Grand Plaza Parkroyal Kuala Lumpur and Grand Plaza Parkroyal Penang in Malaysia.

If, for instance, UOL and the relevant parties accumulate more than 50 per cent of UIC, the offer turns unconditional, which means the deal will have to go through, being no longer dependent on any conditions to succeed.

In such a scenario, UOL will also be required to make a mandatory takeover offer for SingLand at $3.57.

Market watchers think that UOL's offer of $1.20 per share is too low.

While UIC stock has plunged from its year-high of $3.17 last June, its net asset value per share as at Sept 30 stood at $2.48. At $1.20 a share, UOL is getting a 'bargain', they say.

Earlier this month, Filipino tycoon John Gokongwei raised his stake in UIC to 35.05 per cent after his investment vehicle, Telegraph Developments, bought 500,000 shares at an average price of $1.085 each.

This was on top of purchases of 1.095 million shares at between $1.002 and $1.085 apiece that Mr Gokongwei, who is UIC's deputy chairman, made in December.

Two questions come to mind.

Why is Mr Wee offering such a low price for UIC, even after factoring in market conditions that have dragged down asset valuations?

'He could have offered $2, or slightly more. Shareholders may have been more inclined to accept,' said a fund manager.

One argument is that Mr Wee, an astute banker and dealmaker, wants to pay as little as possible and may be looking for distressed sellers who need cash.

Other UIC shareholders include JG Summit Holdings, Morgan Stanley and Fullerton Fund Management Company, a wholly owned unit of Temasek Holdings.

JG Summit Holdings is the holding company of JG Summit Philippines, which in turn is the holding company of Telegraph Developments.

For one thing, Mr Gokongwei is unlikely to accept the offer.

He made a takeover bid for UIC in 2005, after his stake rose above the 30 per cent mandatory takeover trigger.

His offer was at $1.09 a share, which then prompted Merrill Lynch, the independent financial adviser to UIC's independent directors, to say it 'is not fair from a financial point of view'.

Though the bid failed, it allowed Mr Gokongwei to accumulate up to 1 per cent of UIC's share capital in any six-month period without triggering further mandatory takeover offers.

The second question surfaces: What exactly is Mr Wee up to?

There is no doubt he sees something in UIC. UOL has said the deal would allow it to 'better align' the strategic objectives of UIC with its own.

If Mr Wee wanted to 'prise away' UIC, UOL would have come up with a higher bid, but the fact that it did not leaves some observers to believe that UOL's move is purely tactical.

'In merger and acquisition, you never show your best hand,' an investment banker said.

Mr Wee's UOL could even end up doing a Mr Gokongwei-style takeover, suggested one observer, gradually nibbling away at UIC and shoring up stakes in the property-based conglomerate so long as the 1 per cent threshold is not breached in any six-month period. It remains to be seen what Mr Gokongwei will do.

UOL said yesterday it does not intend to revise the offer price 'except that the offerer reserves the right to do so in a competitive situation'.

An analyst said: 'I would love for Mr Gokongwei to trump the bid. It sends a strong signal to the market that there are people who aren't bothered by the credit crunch and can look to long-term growth in the Singapore property market.'

[email protected]