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PETALING JAYA: UEM Sunrise, the real estate arm of Khazanah Nasional, has received a letter of proposal from UEM Group Bhd for a merger with privately owned developer Eco World Development Group Bhd.
The Bursa Malaysia announcement indicates that UEM Sunrise’s board of directors received the letter from UEM Group on October 2, proposing that the two companies merge through a share and warrant exchange.
EcoWorld will subsequently be delisted from Bursa Malaysia.
“The (EMU Sunrise) board will deliberate on the proposal and decide the next course of action. Accordingly, a further announcement will be made in due course, ”Bursa said today.
In the letter, UEM Group said it would wait for a decision on the proposal before October 30 for discussions on the merger to begin.
He said the merger would enhance the scope and ability to execute for the merged entity, leading to greater value creation in the future for shareholders of both companies.
He also said that industry players needed to consolidate their resources in the current economic climate to improve performance and ensure sustainability.
“We anticipate that once the proposed merger is completed, the expanded UEM Sunrise group will focus on real estate developments within Malaysia and planned developments on UEM Sunrise owned land outside Malaysia.
“This will allow the expanded UEM Sunrise group to stay focused on real estate developments within Malaysia,” he said.
He said Khazanah will remain the largest shareholder once the merger is complete, followed by EcoWorld’s major shareholders collectively.
He also proposed that the president of the enlarged company be appointed from among the UEM Sunrise board members.
The UEM Group also urged not to lay off staff after the merger, although it recognized that it would be necessary to streamline the operations of the merged company.
“Given the adverse impact of Covid-19 on the job market, we expect that there will be no immediate layoffs or layoffs of staff from the parties as a direct consequence of the proposed merger.
“It is also proposed to implement a new stock option scheme for the employees of the expanded UEM Sunrise group under the proposed merger,” he said.
