United Engineers in talks to sell subsidiary for $228.7m

A pre-conditional voluntary offer has been received.

United Engineers revealed that it has received an approximately $228.7m pre-conditional voluntary offer for its 68.2% stake in its subsidiary UE E&C.

The VO of S$1.25/share in cash came from Southern Capital Group, a private equity fund. The offer hinges on the condition that the offeror receives more than 50% of the voting shares of UE E&C.

According to CIMB, UEL is set to receive net proceeds of approximately $228.7m and record net disposal gain of S$59.2m should the offer be accepted.

“We estimate that UEM’s net gearing and NAV post-transaction (including the recent sale of orchardgateway) will change from 84% and S$2.79/share, respectively, in 2Q14 to approximately 58% and S$2.88/share, respectively. This move does not come as a surprise to us and it is in line with UEM’s actions of late. The company has been divesting its non-core property assets. We believe the VO paves the way for the potential takeover by Thai tycoon Charoen Sirivadhanabhakdi, who is eyeing UEM's property portfolio,” noted CIMB.