Weak market won’t derail UEM World revamp

Saturday March 15, 2008

Weak market won’t derail UEM World revamp

PETALING JAYA: The current weak market sentiment is unlikely to derail UEM World Bhd's corporate exercise.

An analyst with a foreign brokerage said the group seemed “serious” in achieving the purpose of the exercise, which was to streamline its operations and propel growth.

“It's a matter of pricing for the moment, but there is still time. Prices could recover a few months down the road,” she said, adding that the group had the prerogative to revise the offer.

Last month, UEM World proposed to transform the conglomerate into a pure property player with the eventual listing of UEM Land Sdn Bhd.

The exercise involves a restricted offer for sale (ROS) of shares in four listed subsidiaries – Pharmaniaga Bhd, UEM Builders Bhd, Opus International Group plc, and Cement Industries of Malaysia Bhd – at a 15% premium to a one-month weighted average market price.

In addition, the UEM World shareholders will receive UEM Land shares.

UEM World will then sell off all its unlisted businesses and undertakings to UEM Group for RM13.9mil.

UEM Group will underwrite the remaining shares not acquired under the ROS, which ensures a capital repayment of RM1.26 per UEM World share.

Minority shareholders who decline the ROS can opt for 125 UEM Land shares and cash of RM124.82 for every 100 UEM World shares held.

The proposal, however, is subject to various regulatory approvals.

“The group can make adjustments once the approvals have been secured,” a source said.

Another analyst at a bank-backed brokerage shared a similar view, saying that based on current prices, minority shareholders would not be enticed to accept the ROS.

“Why should they, when they can buy in the open market at much cheaper prices?” he said.

Also, UEM Group would be paying a much higher premium for the shares since some of the companies' share prices had dropped in the recent sell down, the analyst said.

“A possibility is to change the reference price while maintaining the 15% premium,” he added.


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