United Industrial Corp (UIC) shares jumped to as high as 15 percent, after the UOL Group announced to take over shares at $1.20 per share, positioning itself near UIC’s controllership.
UIC’s stocks went soaring, when investors started to purchase stocks amid analysis that a counter-bid of Philippine Stock Exchange is unlikely to happen. John Gokongwie, the chairman of JG Summit holding, must offer $2.85 per share to counter the bid. The stated per stock value was the maximum amount he paid for UIC share in the past six months.
UOB banker WEE Cho Yaw, UOL’s largest stockholder, said that he has no intention of revising the offer price. However, he is still open to it, provided that there is a competitive situation.
UIC’s share value skyrocketed to as much as $1.27, before ending up 12 percent higher at $1.23. UIC’s 72-percent owned real estate subsidiary Singapore Land also performed well, gaining to as high as 5 percent before ending 2 percent high at $3.49 yesterday.
UOL is expected to hand out a mandatory general offer once Singland stake in UIC reaches above 50 percent.
Analysts suggested that the rise in UIC’s stock value was the result of Mr. Gokongwei and other related parties’ persistence to remain as UIC’s largest shareholder.
UOL has the control of 30.2 percent of UIC shares. Mr. Wee is optimistic that his company could still acquire big mass of shares that could propel him to be UIC’s largest investors.
However, Mr. Gokongwei remains firm as the UIC’s major player. The tycoon, who also has investments in communication, banking, foods, and other fields, has been taking steps to build a stranglehold in the company. UIC official said that the businessman’s stake has increased to 35.2 percent from its previous rate of 35.1 percent, following the acquisition of 800,000 stocks obtained by one of Gokongwei’s subsidiaries.
Business analysts, Natasha Parchani and Paul Lian, saw the John Gokongwei-Wee Cho Yaw’s situation as a corporate tug of war for the controllership of UIC and real estate subsidiary Singapore Land.
Donald Chua, a CIMB business analyst, thinks that the share’s offer price is just appropriate.
“At the current offer price, the likelihood of UIC shareholders accepting is extremely low. As such, we believe there is little incentive for Mr. Gokongwei to make a counter-offer,” Chua said.
Market watchers see a sudden purchase of shares by other stakeholders in anticipation of a counter-offer pegged at $2.85.
Mister Chua believes that accepting UOL’s offer is too early for UIC.
“We believe they are likely to be short-changed if the offer is accepted,” Chua said.
Morgan Stanley is another big player in UIC, possessing 12 percent stake. Analysts shun the possibility for Stanley to sell his stake to UOL, saying that the investor’s position in the company is pretty much stable.
Still, UOL’s takeover remains positive despite the poor performance of office and residential sectors.
“Despite the bleak outlook for the residential and office sectors, we take a long- term view and believe the takeover is positive for UOL as it could be getting a portfolio of prime office buildings at undemanding valuations,” said Foo Sze Ming, a OCBC Investment Research analyst.
Though there is still a chance for failed acquisitions, UOL still has the bigger pie of share at the end.