Shares of OCBC Group jumped to a multi-year high of $11.05 a share after news that the bank and its insurance arm sold their stakes in engineering and property development firm United Engineers (UE) and its unit to a group led by Chinese developer Yanlord Land Group and Perennial Real Estate Holdings.
OCBC helped fuel the Straits Times Index's 1.6 per cent rally yesterday, with a 14-cent, or 1.3 per cent, gain to $11.05 - the highest in five years. On Thursday, one of the biggest property takeover deals here in recent years was unveiled, valuing the two stakes at $1.83 billion.
The consortium Yanlord Perennial Investment (Singapore) - led by Yanlord, Perennial and its two sponsors Mr Kuok Khoon Hong and Wilmar International, and an investor - bought a 33.5 per cent stake in UE at $2.60 a share. The consortium intends to make a mandatory general offer for the rest of the engineering, property and hospitality company's shares at the same price.
UE fell 1.5 per cent, or four cents, to $2.67, while Perennial gained 1.7 per cent, or 1.5 cents, to 90 cents.
Yanlord dipped 0.6 per cent, or one cent, to $1.715. DBS Vickers (Hong Kong) maintained a buy call on the Chinese developer, with a target price of $2.25: "As the deal is pretty small for Yanlord, we do not expect it to have significant impact on its stock price."
The consortium also acquired a 10 per cent stake in UE unit WBL Corp at $2.07 a share on Thursday.
The consortium is committed to buy another 19.9 per cent stake in WBL later. If it owns more than 50 per cent of UE, an offer will be made to buy the remaining shares in WBL at the same price of $2.07.
OCBC chief financial officer Darren Tan said: "The offer prices for both UE and WBL ... were the highest received from bidders in the sale process. This packaged deal maximises the value and transaction certainty."
DBS Group Research said yesterday that it "sees potential for a buyer of UE to raise the performance of its key assets - UE Bizhub City and UE Bizhub Central, which are located close to the Central Business District - through active management, and reposition the assets to tenants."
"The consortium involves investors with extensive experience in the real estate sectors within Singapore and China, allowing the partners to optimise returns in the medium term," it said.