About the offer…
On 4th November 2010, UEM Land Bhd plans to take control of Sunrise Bhd in a RM1.4bil deal. Shareholders of Sunrise are given 2 options:
- UEM Land to acquire Sunrise shares at RM2.80 via the issuance of UEM Land shares at RM2.10 each, or
- Sunrise shareholders get 2.80 redeemable convertible preference shares (RCPS) for every one offer share.
Reasons given by UEM Land were:
- Leveraging on Sunrise Group's robust financial strengths and prospects
- Accelerate UEM Land's own business expansion
- To secure new development projects
- And, to create another Capital Land (Singapore state-own company which is one of Asia's biggest property developers)
After the deal is completed…
- UEM Group's shareholding in UEM Land will fall to around 60%
- Major shareholder of Sunrise will have stake of around 9% in UEM Land
- Sunrise will be delisted from Bursa Malaysia
- But, the brand name of Sunrise will be retained
- Creating an enlarged group with combined asset base of over RM5bn
Finance Malaysia thinks that the acquisition would compliment UEM Land's lack of expertise in high-rise, high-end property development. What UEM Land's business was in macro township development, such as the Nusajaya project. Mont Kiara, being the award winning development by Sunrise, is a clear example. UEM Land knows that Nusajaya would NOT be perfect without a brand and expertise such as Sunrise's.
Anyway, FM doubts whether the offer will go through smoothly with a mere 11% premium being offered to Sunrise's shareholders. Moreover, Sunrise was planning to launch 4 projects with total gross development value of RM3.2bn soon.