UEM Sunrise, Eco World shares actively traded on news of merger proposition
KUALA LUMPUR: UEM Sunrise Bhd and Eco World Development Group Bhd shares were actively traded on Monday after the former’s parent UEM Group Bhd tabled a merger proposal of the two big property developers.
UEM Group offered to take over Eco World, which is controlled by Tan Sri Liew Kee Sin, and merge it with its 66.1 per cent-owned UEM Sunrise in a share swap deal.
This will create the largest property entity controlled by Khazanah Nasional Bhd, which fully owns UEM Group.
UEM Sunrise shares closed 0.3 sen higher, or 8.33 per cent, at 39 sen, while Eco World’s shares ended 0.15 sen or 3.8 per cent higher to 41 sen.
Immediately after the announcement, UEM Sunrise shares spiked to a one-month high of 42 sen at 10.26am.
Eco World, on the other hand, hit an intraday high of 44.2 sen at 10am.
A total of 22.55 million UEM Sunrise shares were traded, while Eco World saw 36.95 million units traded.
In a letter to both companies, UEM Group said they were among the largest homegrown property developers listed on Bursa Malaysia with a market capitalisation of RM1.68 billion for UEM Sunrise and RM1.21 billion for Eco World as at September 25 this year.
The proposed share swap will entail the issuance of new shares in UEM Sunrise at 44.3 sen each to shareholders of Eco World in exchange for all Eco World shares at 46.9 sen each.
Pending shareholders’ approval, the merger will see Khazanah controlling the enlarged group with a 43 per cent stake.
UEM Group said it would remain the single largest shareholder of the enlarged UEM Sunrise with a 43 per cent stake, while Eco World’s substantial shareholders would hold 24.2 per cent.
Overall, government-linked investment companies including that of UEM Group will hold a collective stake of more than 50 per cent.
The group said it had explored the possibility of a merger between UEM Sunrise and other property developers but believed the merits were stronger with Eco World.
“A merger with a suitable partner with the right capabilities will help enhance UEM Sunrise’s value through synergistic geographical and product mix improvements.
“The merger is also an opportunity for an existing government-linked company to be in partnership with the private sector to create one of the largest property developers in Malaysia, with a projected gross development value of RM173.2 billion and a total landbank of more than 17,000 acres locally,” it added.
UEM Group said given subdued macroeconomic conditions and market headwinds, there was a pressing need for industry players to consolidate resources and capabilities to strengthen performance and sustainability.
“The merger of UEM Sunrise and Eco World will enhance the merged entity’s scale, diversification and execution capabilities to create a robust business platform for future development.
“This will in turn lead to greater value creation for the current shareholders of UEM Sunrise and Eco World going forward,” UEM Group added.
Source: NST