Published February 19, 2009

UIC adviser says UOL's $1.20 a share offer not fair

By UMA SHANKARI

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THE independent financial adviser appointed by United Industrial Corp (UIC) to evaluate a takeover bid from UOL Group said in a Feb 17 circular to shareholders that UOL's offer price of $1.20 a share is 'not fair'.

The adviser, ING Bank, recommended that shareholders who hold a long-term view of their investments in UIC shares and/or who are confident and optimistic about their investments in UIC and the company's prospects may wish to reject the offer.

But shareholders who hold a short-term view of their investments and who wish to realise their holdings in UIC shares in the near term and/or who are not prepared to accept the uncertainties facing the prospects of the UIC Group may wish to sell their shares on the open market if they can obtain a price equal to or higher than the offer price of $1.20. Yesterday, UIC gained one cent to close at $1.22.

UIC's recommending directors concur with ING Bank's views.

UIC's stock has been climbing since UOL made its offer on Jan 14, even as analysts said that a counter-bid by Philippine tycoon John Gokongwei - who controlled 35.2 per cent of UIC then - was unlikely. This view was given more weight in the circular, which identified Mr Gokongwei as an independent director for the purposes of making recommendations to the shareholders.

UOL, which is controlled by the family of UOB banker Wee Cho Yaw, has also said that it does not intend to revise its offer price except in a competitive situation.

ING pointed out that while the offer price represents a 9.1 per cent premium over the UIC shares' last transacted price prior to the offer, it is lower than the corresponding 23 per cent average premium represented by the recent takeover transactions.

However, the bank noted that there is no assurance that UIC's share price will remain at current levels if the offer is withdrawn, lapses or does not become unconditional. UOL's offer is conditional upon the offerer and parties acting in concert with it holding more than 50 per cent of voting rights in UIC at the offer's close.

'We further wish to highlight that our analysis of historical share price performance is not indicative of future price levels, which will be governed by factors beyond the scope of our review,' said ING. In line with this, the adviser pointed out that the current global economic downturn could also affect the prospects and future financial performance of UIC.

Meanwhile, UIC said that Morgan Stanley, the company's third largest shareholder after Mr Gokongwei and UOL, has pared down its stake in the property group.

Morgan Stanley cut its stake to 11 per cent - from 12 per cent previously - in a series of transactions from Jan 14 to Feb 11.