Correction: An earlier version of this article incorrectly stated the size of Yanlord Land’s stake in UEL; the correct level is 35.27 percent.
This article was originally published on Friday, 25 October 2019 at 8:50 A.M. SGT; it has since been updated to include more details.
Yanlord Land has launched a mandatory conditional offer of S$2.60 a share for United Engineers’ (UEL) shares after acquiring shares in a subsidiary from Perennial UW and Heng Yue Holdings, the Chinese property developer said in a filing to SGX Friday.
That resulted in Yanlord Land having 35.27 percent stake in UEL’s ordinary shares, triggering a mandatory general offer, the filing said.
Yanlord said it doesn’t plan to delist or take UEL private.
“Shareholders of UEL are welcome to remain invested in UEL if they believe in its long-term prospects or accept the UEL offers if they wish to recalibrate their portfolio at a favorable valuation amidst low trading liquidity and heightened economic uncertainty,” Yanlord Land said. It added that UEL’s trading liquidity has historically been low.
The offer is conditional upon Yanlord Land obtaining acceptances for more than 50 percent of UEL’s shares, the filing said.
Under the deal, Yanlord Land’s subsidiary Yanlord Commercial Property Investments acquired Perennial UW’s and Heng Yue’s combined 51 percent stake in Yanlord Investment (Singapore) for S$229.7 million, the filing said.
Perennial Real Estate Holdings said in a separate statement its 72.22 percent-owned Perennial UW sold its entire 45 percent Yanlord Investment stake for S$202.68 million. That valued Yanlord Investment’s UEL shares at S$2.60 each and its WBL shares at S$2.5947 each, Perennial said.
Heng Yue was paid S$27.02 million for its entire 6 percent Yanlord Investment stake, Yanlord Land said.
After Yanlord Commercial’s acquisitions of the Yanlord Investment stakes, Yanlord Land owns all of Yanlord Investments, which in turn owns 35.27 percent of UEL’s ordinary shares, 97.71 percent of UEL’s preference shares and around 29.9 percent of WBL Corp.’s shares, the filing said.
That required Yanlord, via Yanlord Investment (Singapore), to make an offer for all of UEL’s ordinary shares and a comparable offer for its preference shares, the filing said.
If the offer for UEL’s share becomes unconditional, Yanlord Investments will be required to also make a mandatory unconditional cash offer for WBL’s shares, Yanlord said.
Yanlord Land said acquiring the Yanlord Investment stakes was in line with its objective of increasing its UEL and WBL stakes to improve its access to their property portfolio’s in Singapore and China, which are complementary to its existing portfolios.
Yanlord Investment is a special purpose vehicle formed by Yanlord Commercial, Perennial UW and Heng Yu in 2017 to acquire UEL and WBL shares with a view to making an offer for the rest of UEL, the filing said.
“Perennial and Heng Yue had both expressed an intention to dispose of their respective stakes in [Yanlord Investment] in order to focus on investments with direct value creation opportunities,” Yanlord Land said.
Yanlord Land, United Engineers and Perennial Real Estate Holdings requested trading halts on their shares be lifted Friday.
DBS Bank is the sole adviser on the deal, the filing said.