UOL Makes Bid For UIC

Source : The Straits Times, Jan 14, 2009

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