UOL Daily Chart

 Look at this chart from UOL, the picture is very bullish with the price breaking out of the bull flag formation and yet supported by a breakaway gap at $4.70 and $4.71.

The full potential for this breakout is huge. I think it is best I do not workout the target price. So that you don't think that I am extremely bias and overly promoting this UOL.

Nonetheless, this chart has hinted us that someone has an agenda now.

The Trizon - by UIC/SingLand
The only residential project no fully sold yet

This is an old article from The Edge in beginning of 2009. However, I think this is an excellent article to illustrate some rules to play the game of taking over in Singapore.

At least now we know for sure that if UOL or JG Summit are to offer new deal in coming 6 months, it will never lower then $2.40 now.

Written by Goola Warden

Saturday, 17 January 2009 16:01

WHAT IS billionaire banker and property magnate Wee Cho Yaw’s strategy for United Industrial Corp (UIC)? The octogenarian chairman of United Overseas Bank is clearly unfazed by the bearish outlook for the local property sector. Last Wednesday, he seized the bear market by the paws and used UOL Group to make a bid for the shares in UIC that he does not own. If UOL and friendly parties succeed in getting more than 50% acceptances for UIC, it would catapult the duo to among the top-three listed Singapore developers.

Yet, how determined is Wee? The $1.20 per share offer for UIC is seen as a bit of a “lowball” effort by the market. Lim & Tan states in a report issued last week: “Although there is usually no urgency to do anything with an existing position in a takeover situation, we would not chase UIC in anticipation of a counter-bid, just because [John] Gokongwei would need to offer $2.85 if he were to counter, that being the highest he paid in the last six months.” This is stipulated by the takeover code.

Gokongwei is the largest shareholder in UIC with a 35.1% stake. His latest purchase of 800,000 shares was on Jan 15, just after UOL’s offer. Prior to that, he had bought 600,000 shares on Jan 9. And he could technically keep on buying 1% (1.3 million shares) every six months. There’s nothing to stop him.

Interestingly, Gokongwei need not make a general offer at $2.85. He could just wait until the present general offer lapses. The offeror has the right to extend the offer but the offer document already states that UOL won’t raise the price unless there is a competing offer. After UOL’s offer lapses in about a month, Gokongwei could make his own general offer.

After UOL’s offer lapses in about a month, Gokongwei could make his own general offer. By then, his highest purchase price would be less than $2.85. Indeed, if the Filipino tycoon makes his offer in say, March, he could theoretically propose a lower price of $1.30 or $1.40, depending on the highest price he paid in the prior six months. The lower the price, the lower he is able to target his offer. His last general offer in 2005 was at $1.09. And, if the $1 cost for his initial stake in 1999 is taken into account, Gokongwei’s average cost for his 35.1% portion could be at around $1.16 — lower than the offer price of $1.20.

But there is a big unknown: Will Morgan Stanley accept the $1.20 offer from the Wee stable? The US investment bank still holds some 165 million shares or 12% of UIC. In December, the bank sold some shares, and in January this year, it bought them back. Most market watchers reckon it is a potential seller if the price is right as the US financial sector is shoring up their balance sheets amid the financial crisis.

http://www.theedgesingapore.com/component/content/1700.html?task=view

If we take a quick look at the previous price being offer on table, I think both party is very stingy conservative in pricing.

In year 2005, JG Summit, which is the investment vehicle of Filipino-Chinese tycoon John Gokongwei, offered to buy the rest of UIC for S$1.09 per share after its interest in the company exceeded the 30 percent threshold.

In year 2009, UOL Group announced a mandatory conditional cash offer of S$1.20 per share for United Industrial Corporation Limited.

Today, UIC is selling at $2.50 at peak now.

The price of UIC is on long term up trend since financial crisis in 2009. The current price at $2.50 is at all time high since the crisis.

The price has stalled at $2.50 and forming 4th times tested twizzer top include today. I think a lot of energy is require to break this round number.

2357 GMT (Dow Jones) Thinly-traded United Industrial Corp (U06.SG) may gain as
major shareholder UOL Group's (U14.SG) move to increase its stake could raise
investors' confidence in the Singapore office landlord. UOL is buying a 9.7%
stake in UIC from United Overseas Bank (U11.SG) for S$320.5 million or
S$2.40/share, boosting its interest to 42.0% from 32.3% to become the largest
shareholder in UIC, which also owns 3 5-star Singapore hotels. The move will give
UOL greater exposure to Singapore's growing office and hospitality markets, where
both companies have a substantial presence. In a sign of confidence in UIC's
prospects, another major shareholder, John Gokongwei, earlier this week raised
his stake to 35.984% from 35.974% by buying shares from the open market at S$2.40
each. The stock closed 0.4% higher at S$2.41 yesterday. Immediate resistance is
at the 52-week high of S$2.46. (frankie.ho@dowjones.com)

DJ UOL Group To Increase Stake In United Industrial Corp To 42% From 32.3%
23 Dec 2010 07:15

SINGAPORE (Dow Jones)--Singapore property company UOL Group Ltd. (UOLGY, U14.SG) is increasing its stake in United Industrial Corp. (U06.SG) to 42% from the current 32.3% for a total consideration of S$320.5 million.

UOL has agreed to acquire 133.6 million UIC shares from United Overseas Bank (UOVEY, U11.SG) at S$2.40 a share, UOL said in a filing late Wednesday.

The acquisition will be funded by bank borrowings and internal resources.

With the stake increase, UOL will become the single largest shareholder in UIC, which is one of Singapore's largest office landlords in the central business district and has some interest in three five-star hotels in Singapore.

The following is the excerpt from OCBC Investment Research after the cash offer by UOL for UIC shares. Same thing may happen soon but the reaction could be totally different. We will see.

By Foo Sze Ming
OCBC Investment Research
Thu, 15 Jan 2009, 09:07:33 SGT

Yesterday, UOL Group announced a mandatory conditional cash offer of S$1.20 per share for United Industrial Corporation Limited. Depending on the outcome of the takeover, UOL could also be making an offer for Singapore Land Ltd at S$3.57 per share. We believe that the takeover is positive for UOL over the long term as it could be getting a portfolio of prime office buildings at undemanding valuations. UOL will have to pay S$1,560m to complete the takeovers. Fortunately, both UOL and UIC have conservative balance sheets and we believe that UOL’s post-takeover balance sheet will not be overstretched. However, we think it is unlikely for UIC shareholders to accept the offer at this depressed valuation. We believe that the takeover could fail but UOL could end up with a greater stake in UIC. We maintain our BUY recommendation for UOL with fair value of S$2.88.

Can the takeover pull through? Comparing to UIC’s share price band of S$0.97-S$3.16 in 2008, the offer is close to lower bound of the band. We believe that many shareholders (including substantial shareholder, JG Summit with 35.1% stake in UIC) would have accumulated UIC’s shares at significantly higher prices and thus think it is unlikely for UIC shareholders to accept the offer at this depressed valuation. We believe that the takeover could fail but UOL could end up with a greater stake in UIC. We maintain our BUY recommendation for UOL with fair value of S$2.88.


By Carmen Lee
Wed, 4 Mar 2009, 08:19:26 SGT
UOL’s offer of S$1.20 per UIC share closed yesterday evening and by the closure of the offer, UOL and its related parties only managed to secure a total of 674,184,971 UIC shares (48.94% of issued shares) under their control. As the group failed to gain control of more than 50% of the voting rights, the offer had not become unconditional and had therefore lapsed. As such, no offer will be made for SingLand’s shares and 46,463,706 UIC shares (3.37% of issued shares) will be returned to shareholders who had earlier accepted the offer. However, through open market purchases made earlier, UOL had increased its stake in UIC by 15.34% (211,336,465 shares), resulting in UOL now holding an effective stake of 30.78% (423,975,665 shares) in UIC. As a result, UIC will become an associated company of UOL and is expected to contribute to UOL’s bottomline going forward. The above outcome was in line with our expectation. Key risk comes from the decline in UIC’s share price after the offer, which will negatively affect our RNAV and fair value estimates. We maintain our BUY rating on UOL with fair value of S$2.59. (Foo Sze Ming)

Base on the actual figure shown on my outstanding portfolio, the outstanding amount to purchase 4 lots of UIC is $9,638.78.

Normally I paid very little attention to the discrepancies of price.



Screen Captured from the Outstanding Portfolio



After considering all factors, I decided to sink in ten thousand dollars to scoop up UIC shares. Since UIC is trading around $2.40, the quantity shall be 4 lots.

For record, I got it on 24 December 2010 before lunch break exactly at $2.40. The calculated cost by POEMS’ calculator shown that the net amount is $9,633.64.

This is the amount of money I have to set aside to wait for the show time.

I am mentally prepared to average down if something drastic happen.

However, I don't think it will go down much because the last purchase price by UOL at $2.40 has set a benchmark.