OUE approached to buy stake in United Engineers

The OUE building in the Central Business District of Singapore.
The OUE building in the Central Business District of Singapore. ST PHOTO: KUA CHEE SIONG

Property developer OUE, backed by Indonesia's billionaire Riady family, said it has been approached for the purchase of shares in real estate owner United Engineers, but there is no assurance of a binding agreement.

The statement came after Bloomberg News reported that OUE, whose chairman is Mr Stephen Riady, is interested in bidding for a stake in United Engineers (UEL), owned by OCBC and its affiliates.

There "are no ongoing discussions and there is no assurance whatsoever that any definitive or binding agreement for the purchase of shares of UEL by the company will be reached", OUE said in a statement.

OCBC, Great Eastern and affiliated group Lee Foundation hold a stake of 30.6 per cent in UEL, according to Thomson Reuters data.

OUE did not say who approached the company for the UEL stake.

UEL shares surged as much as 6.3 per cent to $2.69, the biggest intraday increase since March 18, before paring their gains to end the day 3.16 per cent higher at $2.61. The shares have advanced 31 per cent this year.

OUE slid 2.2 per cent.

"United Engineers' hospitality and commercial assets could fit well into OUE's portfolio," said Mr Tata Goeyardi, a director at Religare Capital Markets.

Last month, OCBC and its insurance unit Great Eastern Holdings said they were reviewing options for their combined stakes in UEL.

OCBC, Great Eastern and the bank's founding Lee family were working with an adviser to gauge interest in the company, people familiar with the matter said at the time.

The Singapore companies and the Lee family own more than 30 per cent of UEL, the people said last month. Under Singapore rules, buying such a stake would trigger a mandatory takeover offer for UEL, which has a US$1.2 billion (S$1.64 billion) market value.

Exclusive talks between OCBC and Mr Charoen Sirivadhanabhakdi, Thailand's richest person, lapsed last year.

OUE has assets across Asia and the United States.

The real estate company is the sponsor of OUE Hospitality Trust, a hotel REIT, and OUE Commercial Real Estate Investment Trust, an office landlord.

OUE is controlled by the Lippo Group, the Indonesian conglomerate led by Mr Mochtar Riady.

Previously known as Overseas Union Enterprise, OUE is helmed by Mr Riady's son Stephen.

UEL had been selling non-core businesses and assets in recent years, including stakes in property management companies in China, an Indonesian steel fabrication firm and a Singapore wireless broadband provider last year.

It sold its US subsidiary Multi- Fineline Electronix this year.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 06, 2016, with the headline 'OUE approached to buy stake in United Engineers'. Print Edition | Subscribe