Straits Trading

Straits Trading - Latest news was last week where Straits Trading signed an agreement for the sale of its Straits Trading Building to the Sun Venture Group for $450m. The asset monetisation is in line with the group’s strategy of redeploying its capital from its portfolio of high quality, but low yielding investment properties into potentially higher return real estate opportunities. The redeployment of the proceeds will also strengthen the development of Straits Trading’s real estate ecosystem anchored by its 89.5% interest in Straits Real Estate, 20.1% equity stake in ARA Asset Management, and 5.8% interest in Suntec REIT. The group is expected to reap an estimated capital gain of $39m on the sale of the building based on its latest book value as at Jun '14, while based on historical cost, the gain amounts to $373m. The transaction is expected to be completed the end of 2014. Some market watchers have speculated that the asset sale could be an attempt by Straits Trading to prepare its warchest for a potential bidding war for United Engineers after major shareholder OCBC and concert parties revealed that it is in talks to sell its or its 34% stake in the property and construction company. History between the Tan family, which controls Straits Trading and the OCBC's Lee family dates back to the 1920s, but relations between the two families have appeared “less cordial” in the last decade, sparked by disagreements over investment decisions and M&A tussles in Straits Trading, WBL Corp and Robinsons. To refresh investor’s memories, Straits Trading launched a takeover offer for WBL Corp in 2012, sparking a counteroffer by the Lee, family alongside related companies in OCBC, Great Eastern and UE, which subsequently led to the delisting of WBL and UE holding a 67.6% stake in the delisted company.