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Thread: Bid price for UIC factors in market conditions: UOL

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    Default Bid price for UIC factors in market conditions: UOL

    http://www.businesstimes.com.sg/sub/...17222,00.html?

    Published February 4, 2009

    Bid price for UIC factors in market conditions: UOL

    Analysts see explanation as defence of poor price offer

    By JAMIE LEE


    IN what analysts see as a defence of its low offer price for United Industrial Corp (UIC), UOL Group said yesterday that its bid price of $1.20 per share - which values UIC at about $1.65 billion - took into account the poor market and economic outlook.

    UOL Group - controlled by United Overseas Bank (UOB) chairman Wee Cho Yaw - had last month made a $1.15 billion offer for the remaining stake of just under 70 per cent in UIC that it does not already own. The offer came after the holding of UOL and relevant parties crossed the 30 per cent trigger level.

    The offer, priced then at 9.1 per cent higher than UIC's last transacted price of $1.10 per share, was seen as a technical one by analysts. They said that the price was unattractive and that shareholders - including Filipino tycoon John Gokongwei Jr, the largest 35 per cent stakeholder who in 2005 had tried to take over UIC - were unlikely to accept the offer.

    In its offer document yesterday, UOL Group said: 'The offeror considered various factors including the continuing volatility in global credit and capital markets, the difficult economic conditions, and a deteriorating property market in Singapore.'

    The document cited the sullen economic growth estimates that the government had adjusted 'on more than one occasion' and noted reports of declining property sales and pricing that signal a fall in property values this year.

    Citing the 'long-term prospects' of UIC, UOL said that it would look into the business of UIC (including its fixed assets) with a view to enhancing its operations. UIC's assets include SingLand, the listed crown jewel in which it has a 70 per cent stake.

    'Depending on the outcome of the offer...UOL intends to monitor and review the operational performance of UIC and identify any potential areas for operational and strategic enhancement,' UOL said. 'Such enhancements include possible streamlining of any assets or operations of both the UOL Group or the UIC Group.'

    Through SingLand, UIC owns office buildings such as Singapore Land Tower, SGX Centre, Clifford Centre and The Gateway in the Central Business District area.

    It also owns about half of the Marina Square shopping mall and the Pan Pacific hotel.

    UOL said that if it gained control of more than half of UIC, it would offer to buy SingLand at $3.57 per share.

    Since the announcement of the offer, changes in shareholdings have been small, regulatory filings showed.

    As at Feb 2, Morgan Stanley has pared its stake to 11.01 per cent. Last month, UOL upped its stake to 30.29 per cent, while Mr Gokongwei - who analysts say is unlikely to make a counter-bid - mildly raised his stake to 35.18 per cent at $1.22 per share on Jan 22.

    UIC lost 0.8 per cent to end at $1.22 yesterday, while UOL finished up 3.7 per cent at $1.96. SingLand closed unchanged at $3.27.

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    Default UIC adviser says UOL's $1.20 a share offer not fair

    http://www.businesstimes.com.sg/sub/...73540,00.html?

    Published February 19, 2009

    UIC adviser says UOL's $1.20 a share offer not fair

    By UMA SHANKARI


    THE independent financial adviser appointed by United Industrial Corp (UIC) to evaluate a takeover bid from UOL Group said in a Feb 17 circular to shareholders that UOL's offer price of $1.20 a share is 'not fair'.

    The adviser, ING Bank, recommended that shareholders who hold a long-term view of their investments in UIC shares and/or who are confident and optimistic about their investments in UIC and the company's prospects may wish to reject the offer.

    But shareholders who hold a short-term view of their investments and who wish to realise their holdings in UIC shares in the near term and/or who are not prepared to accept the uncertainties facing the prospects of the UIC Group may wish to sell their shares on the open market if they can obtain a price equal to or higher than the offer price of $1.20. Yesterday, UIC gained one cent to close at $1.22.

    UIC's recommending directors concur with ING Bank's views.

    UIC's stock has been climbing since UOL made its offer on Jan 14, even as analysts said that a counter-bid by Philippine tycoon John Gokongwei - who controlled 35.2 per cent of UIC then - was unlikely. This view was given more weight in the circular, which identified Mr Gokongwei as an independent director for the purposes of making recommendations to the shareholders.

    UOL, which is controlled by the family of UOB banker Wee Cho Yaw, has also said that it does not intend to revise its offer price except in a competitive situation.

    ING pointed out that while the offer price represents a 9.1 per cent premium over the UIC shares' last transacted price prior to the offer, it is lower than the corresponding 23 per cent average premium represented by the recent takeover transactions.

    However, the bank noted that there is no assurance that UIC's share price will remain at current levels if the offer is withdrawn, lapses or does not become unconditional. UOL's 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.

    'We further wish to highlight that our analysis of historical share price performance is not indicative of future price levels, which will be governed by factors beyond the scope of our review,' said ING. In line with this, the adviser pointed out that the current global economic downturn could also affect the prospects and future financial performance of UIC.

    Meanwhile, UIC said that Morgan Stanley, the company's third largest shareholder after Mr Gokongwei and UOL, has pared down its stake in the property group.

    Morgan Stanley cut its stake to 11 per cent - from 12 per cent previously - in a series of transactions from Jan 14 to Feb 11.

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