Published March 5, 2009

SingLand shares fall on failed UIC takeover

By UMA SHANKARI

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SHARES of office landlord Singapore Land fell 22 cents, or 6.5 per cent, to close at $3.18 yesterday after UOL Group said that it won't make a takeover bid.

UOL, which had made an offer for United Industrial Corp (UIC), was required to make a bid for SingLand as well if it received the minimum level of shareholder acceptances for the UIC offer. UIC owned about 72 per cent of SingLand when the offer was made in mid-January.

But UOL secured acceptances of just 48.94 per cent when its UIC offer closed on Tuesday, below the 50 per cent needed to trigger a takeover offer for SingLand. This means that there was no need for UOL to launch a general offer for SingLand.

Analysts have said that SingLand's share price outperformed other property stocks over the last month as investors were buying up SingLand shares in the hopes that an offer for the company might be on the way.

The news also sent UIC shares down five cents, or 4.2 per cent, to $1.14 yesterday. UOL also fell one cent, or 0.6 per cent, to $1.65.

Analysts said that the assessment of independent financial adviser ING Bank that UOL's $1.20 a share offer was 'not fair' is likely to have played a key part in dissuading widespread acceptance by minority shareholders.

Separately, CIMB yesterday issued fresh 'underperform' calls on UOL and SingLand in a report on the property sector.

'Property stocks are indeed cheap at the moment,' said CIMB analyst Donald Chua. 'However, we steer clear of the sector as a whole given the risks of more capital raisings and inventory build-up in the system.'

On an adjusted price-to-book value basis and assuming asset writedowns and possible book-value dilution if stocks are recapitalised through rights issues, valuations for many property stocks under CIMB's coverage appear to have touched levels in the last trough of 2003, Mr Chua noted. But there is still a distinct possibility of valuations exceeding previous lows, he warned in the report.

CIMB has a target price of $3.40 for SingLand and $1.66 for UOL.