Minority shareholders of United Engineers (UE) have surprisingly foiled a bid by two key players to offload WBL shares to UE.
Voter turnout was low - only 27 per cent of UE shares were voted during an extraordinary general meeting (EGM) yesterday. Of the votes cast, 67.44 per cent rejected the deal.
This would have involved UE's new shareholder, Yanlord Perennial Investment (YPI), and its former shareholder, OCBC, selling their WBL stock to UE.
Developer Oxley Holdings, which has a 15 per cent stake in UE, cast the swing vote. Excluding Oxley's stake, about 74 per cent of the votes were cast in favour of the resolution.
Oxley chief executive Ching Chiat Kwong said the firm voted against the deal after running its own analysis.
He said: "The majority of the board concurred that we should not support the deal. We have to abide by the decision.
"We are a listed company and we should protect our shareholders' rights."
UE group managing director Roy Tan said: "While it is disappointing... we respect the decision made by the independent shareholders.
"We regret missing this opportunity, which would have permitted the company, its subsidiaries and WBL to operate as a single integrated conglomerate and enjoy better synergies and greater flexibility in business and corporate structuring."
YPI has controlled the board of UE since late last year. It owns a 33.5 per cent stake in UE, which it bought from the OCBC group and its founding Lee family for $2.60 a share last July, a discount to the market price.
At the same time, YPI agreed to buy 10 per cent of WBL for $2.07 a share and committed to acquire another 19.9 per cent from OCBC down the road.
In December, the new UE board proposed that the firm make a cash offer for WBL at the same price YPI had paid, "taking into account that certain WBL shareholders had publicly disclosed that they were willing to divest their shares".
These deals required the approval of UE's minority shareholders.
Since UE will not be buying the OCBC group's 19.9 per cent stake in UE, it will fall upon YPI to do so.
Trading of UE shares was halted yesterday pending the EGM results. They last traded at $2.56 on Thursday.