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KUALA LUMPUR (October 5): UEM Sunrise Bhd has proposed to merge with Eco World Development Group Bhd (EcoWorld) in an agreement that will involve a securities exchange, confirming a report from The edge.
In a letter proposing the merger that was filed with Bursa Malaysia, UEM Sunrise’s parent company, UEM Group Bhd, said that holders of shares and guarantees in EcoWorld will exchange the securities for new shares and guarantees in UEM Sunrise.
Under the agreement, the new UEM Sunrise shares will be issued at a proposed price of 44.3 sen each to holders of EcoWorld shares, for all shares held in the latter at an exchange price of 46.9 sen.
“This will result in an exchange ratio of approximately 1.0587 new UEM Sunrise shares for each of the EcoWorld shares held (the share exchange ratio),” said UEM Group, adding that the ratio was determined by dividing the Exchange price of EcoWorld shares with the issuance of UEM Sunrise shares. price.
“The proposal will be implemented through a membership arrangement scheme between EcoWorld and its shareholders under Section 366 of the Companies Act 2016,” added UEM Group.
Meanwhile, the proposed new UEM Sunrise warrants will be issued to all holders of the outstanding EcoWorld warrants at the share exchange rate, which translates to 1.0587 new UEM Sunrise warrants for each EcoWorld warrant. Then the EcoWorld warranties will be canceled.
According to the group, the deal will create a large entity with a total market capitalization of RM2.89 billion.
“Given moderate macroeconomic conditions and market headwinds, we believe there is an urgent need for industry players to consolidate resources and capabilities to strengthen performance and sustainability,” said UEM Group.
“The merger of UEM Sunrise and EcoWorld will enhance the merged entity’s scale, diversification and execution capabilities to create a strong business platform for future development. This, in turn, will lead to greater value creation for current UEM Sunrise and EcoWorld shareholders in the future, “he added.
UEM Group said that after the merger, the expanded UEM Sunrise will focus on real estate developments in Malaysia, as well as planned developments on land it owns outside of Malaysia.
“This will allow the expanded UEM Sunrise group to stay focused on real estate developments within Malaysia,” he added.
Upon completion of the proposed merger, EcoWorld will become a wholly owned subsidiary of UEM Sunrise and will be delisted.
According to UEM Group, it has a 66.1% stake in UEM Sunrise. The UEM Group itself, in turn, is a unit of the Khazanah Nasional Bhd sovereign wealth fund.
After the merger, Khazanah, through the UEM Group, will remain the largest shareholder in UEM Sunrise and EcoWorld collectively.
Meanwhile, EcoWorld CEO Tan Sri Liew Kee Sin will have a 3.6% stake in UEM Sunrise, while his son and CEO Liew Tian Xiong will have 2.8%. Three entities that have stakes in EcoWorld, namely Sinarmas Harta Sdn Bhd, Eco World Development Holdings Sdn Bhd and Jernih Padu Sdn Bhd, will have stakes of 12.6%, 3.4% and 1.9% respectively.
UEM Group also proposed that UEM Sunrise be led by a chairman who currently sits on its board of directors.
“We anticipate that the composition of the board of directors and key management of the expanded UEM Sunrise will be determined by an integration committee to be formed, which will be comprised of representatives from UEM Sunrise and EcoWorld,” he said.
The integration committee will be co-chaired by the respective presidents of UEM Sunrise and EcoWorld, according to the statement.
UEM Group said a new hire stock option scheme was also proposed as part of the merger for the staff of the enlarged property developer.
“We recognize that there may be a need to reorganize and optimize the operations of the expanded UEM Sunrise group once the proposed merger is completed. However, taking into account the adverse impact of Covid-19 on the labor market, we expect that there will be no immediate dismissal or dismissal of the parties’ personnel as a direct consequence of the proposed merger.
UEM Sunrise has a presence in Peninsular Malaysia and Australia, with a remaining land bank of over 12,000 acres (4,856.23ha) primarily in Iskandar Puteri, one of Iskandar Malaysia’s flagship areas, where it is also a master developer.
Meanwhile, EcoWorld has launched 25,357 properties with cumulative sales of RM20.5 billion since it debuted in 2013, and indirectly holds a 27% stake in Eco World International Bhd (EWI), a publicly traded developer with a presence in the UK and Australia, where it has achieved cumulative sales of RM13.4 billion.
At the time of writing, UEM Sunrise rose 4.5 sen or 12.5% to 40.5 sen, which values the group at RM1.84 billion, while EcoWorld rose three sen or 7.59% more to 42.5 sen, which gives it a market capitalization of RM1.27 billion.
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