Oversea-Chinese Banking Corp. (OCBC) is in talks to sell its stake in United Engineers Ltd. (UEM), a Singapore property and construction company, to Thai billionaire Charoen Sirivadhanabhakdi, people familiar with the matter said.
The discussions are at an early stage, said one of the people, who asked not to be identified as the deliberations are private. OCBC, its insurance unit and the bank’s founding Lee family together own 34.1 percent of United Engineers, according to a filing in August last year. Buying more than a 30 percent stake would trigger a mandatory takeover offer for United Engineers under Singapore rules.
United Engineers shares were halted from trading today after they jumped the most in more than four years, prompting Singapore’s stock exchange to ask the company to explain the move. The stock was up 7.4 percent to S$2.46 before the suspension, with trading volume of more than five times the six-month daily average.
Selling the stake would help OCBC, Southeast Asia’s second-largest lender, bolster capital after its $5 billion takeover of Hong Kong’s Wing Hang Bank Ltd. this year. Companies backed by Charoen have announced $4.5 billion of acquisitions this year, data compiled by Bloomberg show.
In 2012, OCBC entered talks to sell its holdings in Fraser & Neave Ltd. and Asia Pacific Breweries Ltd. to Charoen’s Thai Beverage Pcl. That touched off a three-front bidding war for the two companies, with Heineken NV eventually buying Asia Pacific Breweries and Charoen beating out OUE Ltd. for Fraser & Neave in deals that totaled $15 billion, data compiled by Bloomberg show.
OUE had earlier expressed interest in OCBC’s stake in United Engineers, though those talks are no longer active, said one of the people. OCBC and its units also control 69 percent of the company’s preference shares, according to United Engineers’ latest annual report.
Before today, United Engineers had advanced 29 percent in Singapore trading this year, giving the company a market value of S$1.5 billion ($1.2 billion) as of yesterday’s close.
Soammaphat Traisorat, chief executive officer of Charoen’s Bangkok-based TCC Land Co. unit, didn’t respond to phone calls or e-mails seeking comment. Spokesmen for OCBC and OUE (OUE) declined to comment.
Charoen is Thailand’s richest man with a $12.7 billion fortune, according to the Bloomberg Billionaires Index. He controls an empire whose businesses span industries from beer to property development.
Frasers Centrepoint Ltd., a developer controlled by Charoen, succeeded this month in gaining control of Sydney-based Australand Property Group in a $3.4 billion deal, according to data compiled by Bloomberg. His consumer goods distributor, Berli Jucker Pcl, agreed Aug. 7 to buy Metro AG’s wholesale stores in Vietnam for $874 million including debt, the data show.
United Engineers, which bought Singapore-based builder WBL Corp. last year for $725 million including debt, was founded in 1912 as an engineering company that helped build Singapore’s Shangri-La hotel and historic supreme court.
The company last week said second-quarter profit doubled as it booked income from recently completed residential properties. United Engineers’s properties includes the UE Square shopping mall in central Singapore, and it owns real estate projects in five Chinese cities through WBL, according to the companies’ websites.
United Engineers agreed to sell its MFS Technology business this month for S$124 million, and its engineering unit said in March that United Engineers was in talks to sell its stake. United Engineers is also divesting its luxury-car dealership, according to people familiar with the matter.
OCBC Chief Executive Officer Samuel Tsien said this week that he’ll look to sell “non-core” assets following the Wing Hang purchase. The Singaporean bank plans to raise S$3.4 billion by selling shares to existing investors to replenish capital after the acquisition.
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