UE/WBL

UE/WBL: UE TO LAUNCH ALL-CASH PRE-CONDITIONAL VOLUNTARY GENERAL OFFER FOR WBL AT $4.00 A SHARE United Engineers / WBL: United Engineers announced that it intends to launch a takeover for WBL in an all-cash pre-conditional voluntary offer that values WBL at close to $1.1b. The Offer is for the remaining 61.7% of WBL, or 167.6m shares, and all outstanding convertible bonds in WBL, that the Offeror and its concert parties do not own. The concert parties comprising OCBC Bank, Great Eastern, the Lee Group, and directors of the Offeror, own a combined 38.3% stake in WBL. The Offer price at $4.00/share is at a 19.0% premium to a competing cash offer (adjusted for dividend) and represents a 14.0%, 13.3% and 12.0% premium to the last transacted price on 23 November 2012, 1-month VWAP and 3-month VWAP up to 23 Nov12, respectively. UE said the rationale for the Offer is as follows: 1) To expand and diversify the UE Group’s development and investment property 2) Gain exposure to longer-term growth in PRC’s real estate market 3) Harness synergies, particularly between properties, construction, and engineering businesses 4) Add additional growth engine via WBL’s automotive business, which is a source of recurring income 5) Explore opportunities to enhance value across the WBL’s diverse portfolio of businesses Grp note that for WBL shareholders, Offer provides a better alternative at a 19.0% premium to a competing cash bid. Recall 2 weeks ago, STRAITS Trading Co announced plans to buy 64.02m WBL shares, or 23.61% of the firm, from Aberdeen Asset Management Asia and Third Avenue Management. This will be paid for with the 68.5m new Straits Trading shares to be issued, in a share swap of 1.07 shares for every WBL share. The acquisition will bring Straits Trading combined holdings, together with parties acting in concert, to 44.6%. WBL shareholders will then have the option of receiving either 1.07 new Straits Trading shares or $3.41 in cash - the average price of WBL shares on Nov 23 - for each WBL share they hold. We note that OCBC , which holds 5.84% of WBL, had expressed concerns then that the offer may be too low. It noted that the cash offer of $3.41 a share is below WBL's latest reported net asset value of $3.48 a share.