UOL gains option to buy 60m UIC shares from Haw Par

PROPERTY play UOL Group is poised to buy investment holding company Haw Par Corporation's stake in another property play, United Industrial Corporation (UIC), via a share swap.

UOL announced an option agreement under which, if exercised, will see UOL issue 27.3 million new shares to Haw Par in exchange for 60 million UIC shares.

On completion, UOL's stake in UIC will increase from 44.71 per cent to about 48.94 per cent.

The transaction is to allow UOL to gain a significant minority interest in UIC which would not otherwise be easily available due to the lack of liquidity in UIC, UOL said.

"This is in line with UOL's objective of consolidating its interest in UIC, with a view to achieving statutory control (over 50 per cent) of UIC in the future."

The transaction is based on an exchange ratio of 2.2 times, a single-digit percentage premium over the exchange ratios implied by volume-weighted average prices of both firms over most comparable periods up to six months.

It is also at an implied 5-plus per cent premium based on exchange ratios of book values and tangible book values of both firms.

UOL last traded at S$7.68, UIC at S$3.28, and Haw Par at S$11.31.

Shares of all three have been halted this week, fuelling speculation that UIC could be privatised by UOL.