UEM unit to consider merger with Eco World

by BERNAMA / pic by TMR FILE

UEM Group Bhd (UEM) is proposing UEM Sunrise Bhd and Eco World Development Group Bhd to consider and deliberate on a potential merger between the two companies, to create one of Malaysia’s largest property companies and sustain long-term value creation and growth.

UEM said the merger between its 66.1 per cent owned unit and Eco World would create an opportunity for an existing government-linked company to be in partnership with the private sector to create one of the largest property developers in Malaysia, with a projected gross development value of RM173.2 billion and a total landbank of more than 6,880 hectares locally.

UEM is a 100 per cent subsidiary of Khazanah Nasional Bhd.

“The group believes that industry consolidation will create value for all shareholders.

“Against a backdrop of subdued macro-economic conditions which has been further disrupted by the COVID-19 pandemic, there is a pressing need for local property developers to improve the robustness of their businesses by pooling resources and capabilities to strengthen their performance and long-term sustainability,” it said in a statement today.

It said the board of the two respective companies would independently consider the merits of the proposal and decide on whether to pursue further discussions.

Should the parties agree to the proposed merger, it would result in an enlarged UEM Sunrise, and new shares and warrants will be issued in exchange for shares and warrants of Eco World.

The enlarged UEM Sunrise will retain its listing status on Bursa Malaysia, and UEM will remain the single largest shareholder of the enlarged UEM Sunrise with a 43.0 per cent stake, while the substantial shareholders of Eco World will hold a 24.2 per cent equity stake.

Government-linked investment companies (including that of UEM) would hold a collective stake of more than 50.0 per cent.

At 10.45 am, UEM Sunrise’s shares rose five sen to 41 sen with 12.89 million shares transacted, while Eco World’s shares increased 3.5 sen to 43 sen, with 21.83 million shares changing hands.