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Hot stock: United Engineers shares jump as OCBC reviews options for stake

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United Engineers Ltd jumped to a 14-month high after Oversea-Chinese Banking Corp and an affiliate said they were reviewing options for their combined stake in the century-old Singapore property and construction company.

[SINGAPORE] United Engineers Ltd jumped to a 14-month high after Oversea-Chinese Banking Corp and an affiliate said they were reviewing options for their combined stake in the century-old Singapore property and construction company.

OCBC, its insurance arm Great Eastern Holdings Ltd and the bank's founding Lee family are working with an adviser to start gauging interest, people familiar with the matter said, asking not to be identified as the deliberations are private.

Exclusive talks between OCBC and Charoen Sirivadhanabhakdi, Thailand's richest person, lapsed last year after parties couldn't reach an agreement about the asset.

United Engineers shares rose as much as 5.8 per cent Tuesday, the most in more than six months, to S$2.55 per share.

OCBC and Great Eastern are "currently reviewing strategic options" for their combined stakes in United Engineers as well as WBL Corp, according to a Monday evening Singapore stock exchange filing.

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A sale of the stakes would be welcome in the city state where dealmaking is in a slump this year, even as finance-related companies in South-east Asia - including OCBC - continue to pursue deals.

OCBC agreed in April to pay about US$320 million for Barclays Plc's wealth and investment-management business in Asia, beating out Singapore rival DBS Group Holdings Ltd in the bidding.

Meanwhile, announced mergers and acquisitions involving Singapore companies total US$55 billion in the first nine months of the year, down 31 per cent from the US$80 billion during the same year-ago period, according to data compiled by Bloomberg.

The Singapore firms and the Lee family own more than 30 per cent of United Engineers, the people said.

Under Singapore rules, buying such a stake would trigger a mandatory takeover offer for United Engineers, which has a US$1.2 billion market value.

Shares of United Engineers, founded in 1912, advanced 27 per cent in Singapore trading this year, while the benchmark Straits Times Index is down 1.2 per cent over the same period.

OCBC and Great Eastern declined to comment, while a representative for United Engineers didn't immediately respond to an e-mail seeking comment.

United Engineers has 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 said in February it was selling a US subsidiary Multi-Fineline Electronix Inc.


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