More Excitement As Tans Firm Up Stakes In Wearnes, UEL?

Source : The Business Times, March 6, 2008

WITH Oversea-Chinese Banking Corporation’s founding Lee family capitulating to the family of the late Tan Chin Tuan (the bank’s longest-serving chief executive) in the fight for control of Straits Trading Company (STC), it would have appeared that things would take a quiet turn now.

By Tuesday, the Tans had gained control of nearly 75 per cent of Straits Trading’s outstanding shares as OCBC Bank handed over its 6.2 per cent stake. But instead of just consolidating their control over the company - which not only has a cash stash of some $347 million besides some prime property and one of the world’s largest tin smelters - the Tans now appear to have set their sights on several other parts of the OCBC Bank stable like Wearnes (WBL Corporation) and United Engineers Ltd (UEL).

Wearnes last Friday announced matter-of-factly to the Singapore Exchange (SGX) that a certain Kambau Pte Ltd had increased its stake in the diversified company, whose interests include automobile distribution, electronics and property .

Kambau, which is affiliated to the Tan family’s Tecity Management Pte Ltd and Tan Foundation, reported that it had raised its stake in Wearnes from 1.56 per cent to 1.92 per cent through the purchase of an additional 755,000 shares at $4.30 each.

Nevertheless, Kambau’s deemed interest in Wearnes remains at exactly the same 3.09 per cent as before the latest purchases. Perhaps an explanation to the less initiated would be helpful.

Normally, an investor with a stake lower than 5 per cent does not have to report to the Exchange until that mark has been breached. But with Straits Trading already having a 6.22 per cent stake, Kambau must have decided that it was prudent to report the deal.

The price of Wearnes shares since Kambau’s transactions has shot up to a high of $5.35 as some sophisticated investors appear to have wised up to the game; it was just $4 a share a month ago. And, remember, this is in a market where most other stock prices have been depressed.

Also, in the last few days, both the volume and price of transactions in United Engineers shares have risen significantly. The property and engineering company’s shares hit a high of $4.05 yesterday; a month ago, they could be bought for as low as $3.42 apiece. In the last couple of days, more than three million shares have changed hands.

The market has it that, again, the Tan family is involved, as Straits Trading holds some 12.22 per cent of its ordinary stock. Kambau owns 7.89 per cent of the preference shares while, interestingly enough, Wearnes has a 9.97 per cent stake in the company.

It makes some sense for the Tan family to consolidate its holdings in Wearnes and United Engineers through Straits Trading. The current purchases are perhaps to ensure that, should Straits Trading make a takeover bid for these two chips of the old OCBC block, it would succeed.

Both companies and OCBC Bank are part of the stable that the late Mr Tan nurtured and grew into the blue chips they are now. So Tecity chief executive Chew Gek Khim, Mr Tan’s daughter, is familiar with these companies and should, at the very least, have a rough idea of their worth.

Perhaps it’s Ms Chew’s desire that the rest of the stable does not go the same way as department store Robinsons & Company, which is now the subject of a takeover bid by ALF Global Private Ltd, a unit of the Middle East-based Al-Futtaim Group.

In any case, a contest for control of these companies can only be good for their minority shareholders as the combatants unlock the true value of these stocks.