UEM Land: No plan to raise bid for Sunrise

By Sharen Kaur
Published in NST on Nov 9 2010

UEM Land Holdings Bhd has no plans to raise its bid for Sunrise Bhd after the latter's share price jumped above the offer price yesterday.


It offered RM2.80 per share in an all-share deal but Sunrise shares rose 28 per cent to close at RM3.22 yesterday.

Although major shareholders with a 40.34 per cent stake have agreed to the offer, UEM Land still needs another 9.7 per cent for the deal to happen.

"We believe the current market price of Sunrise is only reflecting the proposed dividend announced, the proposed offer structure and the pricing of our offer to acquire Sunrise at RM2.80 per share," UEM Land said in response to Business Times' questions.

Sunrise shareholders are offered 1.33 UEM Land shares for every share they hold, priced at RM2.10 each.

"As such, any increase in UEM Land share price, will result in a proportionate increase in Sunrise share price as to reflect the proposed structure and pricing," it added.

Shares of UEM Land rose 10.2 per cent to close at RM2.49 yesterday.

Most analysts think the offer, which values Sunrise at RM1.4 billion, is low.

AmResearch Sdn Bhd said the offer means UEM Land is getting Sunrise at a 28 per cent discount to its estimated net asset value (NAV) of RM3.89 a share.

OSK Research said there is a 31 per cent discount to its 2011 target price of RM4.33, based on the offer price and after adding the recently-announced net interim dividend of 20 sen.

But ECM Libra reckons that not everything can be based on numbers in this deal, as the fact that major shareholders are accepting could mean a lack of growth prospect for Sunrise.

Datuk Tong Kooi Ong, a major shareholder of Sunrise, is staying in a senior management role in the enlarged group.

"As such, the question to ask is whether the existing major shareholders of Sunrise expect positive value creation from this exercise," ECM Libra said in a report.

Analysts also think that the deal may spark more takeovers in the sector.

There is speculation of a deal between IJM Land Bhd and Bandar Raya Development Bhd (BRDB).

BRDB, famed for crafting thriving communities like Bangsar, has land surrounding its CapSquare development and along the Federal Highway.

MIDF Research senior analyst Syed Muhammed Kifni thinks that Sime Darby Property Bhd and Mah Sing Group Bhd would be a good fit.

   (ENDS)