Perennial Said to Be Chosen for Final United Engineers TalksBy
Deal for century-old property group could be reached in June
Perennial shares jump, triggering Singapore exchange query
An agreement could be reached as soon as this month for United Engineers, which has a market value of S$1.8 billion ($1.3 billion), according to one of the people. Perennial edged out other final bidders including KKR & Co. and Haiyi Holdings Pte, the majority shareholder of Singapore-listed SingHaiyi Group Ltd., the people said, asking not to be identified because the information is private.
Shares of Perennial rose as much as 9.9 percent in Singapore trading Thursday, hitting the highest level in more than a year and prompting queries from the local exchange. The company said in an exchange filing Thursday it made a proposal relating to United Engineers as part of a consortium. United Engineers jumped as much as 5.7 percent, the most intraday since October 2016.
Any deal will add to the $11.6 billion of acquisitions in Singapore’s real estate industry over the past 12 months, data compiled by Bloomberg show. A buyer of United Engineers would gain a property portfolio that includes Singapore shopping centers like Rochester Mall and mixed-used developments such as UE BizHub City, as well as condominiums, hotels and serviced apartments, according to its website.
“This is a prime portfolio, albeit in need of some work to enhance returns for whosoever buys it,” Priyaranjan Kumar, regional executive director of capital markets at Cushman & Wakefield Inc. in Singapore, said by email Thursday. “It sits well with groups who will rely on active asset management to improve income over the medium term.”
The company’s biggest investors, Oversea-Chinese Banking Corp. and its insurance unit Great Eastern Holdings Ltd., said in January they’re reviewing their stakes in United Engineers and its closely held engineering subsidiary WBL Corp. Before it proceeds with an offer, Perennial is seeking clarification from Singapore regulators on the procedures for a simultaneous purchase of the investors’ holdings in both companies, according to one of the people.
A deal could be delayed or fall apart, and another buyer could still emerge, the people said.
KKR declined to comment in an emailed statement. OCBC and Great Eastern said in a Singapore exchange filing Thursday that they have received proposals from “several parties” for their United Engineers stakes. They are still evaluating the proposals and holding discussions with the suitors, according to the filing. SingHaiyi referred queries to Haiyi Holdings, which didn’t immediately respond to requests for comment.
OCBC, Great Eastern and the bank’s founding Lee family own more than 30 percent of United Engineers, people with knowledge of the matter said in September. Buying their shareholdings would trigger a mandatory takeover offer for the company under Singapore rules.
Perennial, led by Chief Executive Officer Pua Seck Guan, a Singapore-based developer and landlord, owns stakes in projects including the Chinatown Point retail and office complex and AXA Tower in the city-state’s central business district, according to its website. Its largest shareholder is Kuok Khoon Hong, the chief executive officer of Wilmar International Ltd., the world’s largest palm oil trader.
In January, Perennial said it will receive about S$101 million from selling a stake in Singapore downtown mixed development project TripleOne Somerset to Hong Kong’s Shun Tak Holdings Ltd.
— With assistance by Daniela Wei, and Pooja Thakur Mahrotri