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A TENDER offer by JG Summit Holdings Inc. to take control of Singapore-based United Industrial Corp. (UIC) will require around 1.04 billion Singapore dollars, an amount the Philippine-based conglomerate may not be able to afford on a cash basis, ATR-Kim Eng Securities Inc. said.
Officials of JG Summit have repeatedly declined to comment on speculation that the firm is preparing a takeover bid for UIC after its indirectly owned subsidiary, Telegraph Development Ltd. (TDL), increased its stake in UIC to 29. 97 percent.
Under Singapore rules, shareholders accumulating more than 30 percent of the outstanding shares of listed firms are required to buy the rest of the company.
"We estimate a tender offer would cost JG Summit around 1.04 billion Singapore dollars based on UIC's current market capitalization of 1.49 billion Singapore dollars," ATR-Kim Eng analyst Laura Dy-Liacco said in a research note.
She estimates JG Summit's consolidated cash as of end-June at around 40 billion pesos, of which 25 billion are held by listed subsidiaries such as Univeral Robina Corp., Robinsons Land Corp. and Digital Telecommunications Philippines Inc.
"Despite its substantial cash hoard, JG Summit may not be unable to afford this on a cash basis, as it needs to support the various business undertakings of its subsidiaries," Dy-Liacco said.
Nevertheless, she is keeping her "buy" recommendation on JG Summit, with a net asset value estimate of 8.47 pesos a share.
BY RUBY ANNE M. RUBIO, Reporter
Summit Top Investments Ltd., an indirect subsidiary of Gokongwei-led JG Summit Holdings, Inc., yesterday offered to buy more shares of Singapore-based United Industrial Corp. Ltd. as part of a takeover.
It offered to pay S$1.09 per United Industrial share.
CIMB-GK Securities Pte. Ltd, Summit’s financial adviser, said the offer came after Summit and Telegraph Developments Ltd., another JG Summit unit, bought additional shares, activating a 30% trigger. "CIMB-GK, as financial adviser to the offeror, confirms that sufficient financial resources are available to the offeror to satisfy full acceptance to the [United Industrial] offer based on the 1,377,481,220 [United Industrial] shares in the issue as the date of this announcement."
CIMB-GK said Summit is required to make a mandatory conditional cash offer for all United Industrial shares not already owned, controlled or agreed to be acquired by Summit and Telegraph in accordance with Singapore’s rules on takeovers and mergers.
Incorporated in the British Virgin Islands on Aug. 8, Summit is an indirect wholly owned unit of JG Summit. Its principal activities are that of an investment holding company. Its directors are John L. Gokongwei, Jr., James L. Go, Lance Y. Gokongwei, Perry L. Pe and Patrick O. Ng.
Prior to the announcement, Telegraph and Summit own 413.2 million United Industrial shares, representing 29.9971% of the issued and paid-up share capital of United Industrial.
Yesterday, Summit bought 50,000 United Industrial shares representing 0.0036% of the issued and paid-up share capital of the Singapore firm at S$1.09 per share.
As a consequence of the acquisition, Summit and Telegraph control a total of 413.26 million United Industrial shares, representing a total of 30% of the issued and paid-up share capital.
The tender offer will be for no less than 21 days during which JG Summit and its units will not make further comments aside from what is in the disclosure.
Late last month, Telegraph increased its stake in United Industrial to 29.97% from 29.783%.
United Industrial started as a detergent manufacturer in 1963 but has since evolved into a conglomerate with interests in property investment and development as well as information technology.
Listed on the Main Board of the Singapore Exchange Securities Trading Ltd., United Industrial was incorporated on July 3, 1963. The group’s principal activities consist mainly of development of properties for investment and trading, investment holding, property management, trading in computers and related products, computer training, development management and consultancy, and investment in hotel and retail centers.
If a company is not paying dividends and hoarding cash wouldn't its share price go up to compensate for not paying dividends to its shareholders? Shares should reflect the underlying assets of the company including retained earnings. Im writing this keeping in mind that the company plans to use this cash to aquire more business that will generate more cash in the future. If the company doesnt have any plans for its cash then they should declare a dividend.
Berkshire Hathaway owned by legendary investor Warren Buffet only declared 1 dividend in its history and has never declared dividends ever since, its stock price has soared to compensate for this.
If SEC has regulations forcing every company in the Philippines to declare dividends it is plain wrong as it deteriorates value for shareholders since dividends are taxable, so it is the government who stands to gain from this regulation not the shareholders.
If earnings are retained the value of the company increases and sooner or later its share price would reflect the underlying value of the company.
it's stock price hasn't really gone up fujiang. that's the problem. furthermore, the company is awashed with cash and keeps them. that is what's dissapointing. a very worrying thought has occurred to me that a company can always use that "excuse" ( they are planing to buy something or planning to expand) to keep their earnings at the expense of their shareholders. i am not talking about retained earnings for 1 year fujiang, at least 5 years of humongous retained earnings. that is what i find unreasonable. SM of henry was much better in giving dividends.
By Zinnia B. Dela Peña
The Philippine Star
The Philippine Stock Exchange suspended Friday the trading in shares of Robinsons Land Corp. to give market players time to go over the property firm’s new dividend policy and plans for private placement.
RLC, the property unit of Gokongwei flagship firm JG Summit Holdings Inc., requested for a one-day trading suspension on its stock to prevent "any undue fluctuations and distortion" in its share price.
RLC said its board of directors approved to maintain an annual cash dividend payout ratio of 60 percent of its consolidated net income as of the preceding fiscal year.
The last cash dividend declared by RLC was made earlier this year and was equivalent to 20 centavos a share.
The RLC board also named Macquarie Securities (Asia) Pte. Ltd as financial adviser to study and evaluate the options available for the company that will aim to enhance share trading liquidity of the company.
RLC also disclosed that some of its shareholders are contemplating a placement of shares.
RLC’s objective is to further strengthen its position as the most solid and reputable real estate developer in the country.
It intends to steadily expand its shopping mall business by building three to four new shopping malls a year. It also plans to develop leaner commercial centers in provincial cities with a smaller average gross floor area of 25,000 square meters each.
Elizabeth L. Sanchez
Inquirer News Service
MAJOR SHAREHOLDERS OF ROBINSONS Land Corp. (RLC) may sell a portion of their combined 90-percent stake in the hotel and subdivision developer to increase shares traded in the stock market.
RLC president Lance Y. Gokongwei told the Inquirer that the plan, which is still under study by the company's financial adviser, would increase the public float of RLC shares from the current 10 percent.
Gokongwei said JG Summit Holdings Inc., the flagship company of taipan John Gokongwei Jr., food and beverage unit Universal Robina Corp. and other affiliates, hold roughly 90 percent of RLC.
To evaluate its selling options, RLC has appointed Macquarie Securities (Asia) Pte. Ltd. as financial adviser.
Asked whether shareholders would use the proceeds to fund the group's takeover of Singapore-based real estate firm United Industrial Corp. Ltd. (UIC), Gokongwei said the two were "independent" transactions.
Separately, RLC also disclosed it was raising its dividends to shareholders to 60 percent of the company's consolidated net income from the current 30 percent.
By Zinnia B. Dela Peña
The Philippine Star
Universal Robina Corp. (URC), the food manufacturing arm of the Gokongwei holding company JG Summit Holdings Inc., is raising its capital stock to P3 billion from P2 billion to cover a 15-percent stock dividend and its planned issuance of shares to foreign institutional investors.
In a disclosure to the Philippine Stock Exchange yesterday, URC said its board approved the issuance of up to 365 million common shares coming from its unissued authorized capital stock to international institutional investors.
URC said the shares to be offered to potential investors will be sold at a price that is within the range of plus or minus 10 percent of the prevailing market price of the common shares of the company.
However, the final terms and conditions of the stock sale to institutional investors have yet to be finalized by the URC’s board.
URC said the amount of P252.97 million out of the capital increase will be used to cover its dividend declaration. The new capital shall consist of 2.998 billion common shares and two million preferred stocks each with a par value of P1.
URC said the company will seek the approval of minority shareholders to waive the requirement to conduct a rights or public offering of shares during a special stockholders’ meeting on Nov. 22. In the meeting, the company will also seek its shareholders’ approval for the increase in its authorized capital stock.
Waiving the requirement to conduct a rights offer will pave the way for the entry of the new institutional investors.
URC is stepping up its international expansion this year as it positions itself as a major regional branded food company in Asia. Offshore operations currently account for a third of URC’s revenues from its branded food business.
On the local front, URC has set aside P900 million for the rehabilitation of its flour mill, the expansion of its sugar mill and additional machinery and the improvement of its agro-industrial and commodity food plants.
Gokongwei, Singaporean banker headed for clash over UIC
SINGAPORE - United Overseas Land Ltd., controlled by banker Wee Cho Yaw, has raised its stake in Singapore property group United Industrial Corp Ltd. (UIC), setting the stage for a showdown between Wee and Philippine business tycoon John Gokongwei, market observers said.
Shares of UIC were up 5.0 percent at S$1.25 early on Tuesday on expectations there would be a bidding war for the company.
"Wee has bought a lot of shares. It remains to be seen whether he will make a counter bid for the company," said a trader with a Singapore bank brokerage.
Gokongwei launched a S$1.53 billion ($904 million) takeover bid last week for UIC through his company JG Summit Inc. by offering cash of S$1.09 per UIC share.
UIC said in a statement on Monday that UOL had raised its stake to 12.38 percent from 11.94 percent through open market purchases of 6.09 million shares.
It said the stake purchase had taken the holdings of United Overseas Bank Ltd. in UIC to 20.33 percent.
UOL is an associate firm of United Overseas Bank, Singapore's second-largest lender. All three firms are controlled by Wee.
The Straits Times newspaper said on Tuesday that UOL's stake purchase had made a showdown between Wee and Gokongwei over UIC more likely.
The Filipino tycoon owns just over 30 percent of UIC and sits on the company's board as deputy chairman. Wee is chairman of UIC, which in turn controls 72 percent of office owner and developer Singapore Land.
BY ROULEE JANE F. CALAYAG, Reporter
Robinsons Land Corp. has bested other bidders for two prime lots in Ortigas put on the auction block by the Ortigas & Co. Ltd. Partnership.
Sources privy to the deal said negotiations for the two lots, totalling 2,445 square meters, ended on Monday with the signing of a deal between Ortigas & Co. and the property arm of the Gokongweis’ JG Summit Holdings, Inc. The lots are on Topaz Street across the Asian Development Bank.
Other bidders included a major religious group based in the area. The religious group, which earlier planned to build a worship center, reportedly backed out, giving way to Robinsons Land to acquire one additional lot from the original offer of only one.
Sources, however, could not say how much Robinsons Land paid for the lots, with value estimated at over P1 billion.
BusinessWorld tried to confirm the amount from Ortigas & Co. Chief Operating Officer Rex Drilon II but he was unavailable.
Last week, he told BusinessWorld Ortigas & Co. was finalizing a deal for the lots.
Many groups reportedly scrambled to get a piece of the attractive location but later backed out on various concerns. The changes had led to extended negotiations between June and October.
The lots are strategically located with big companies, mostly listed, holding offices in the area, including San Miguel Corp., the Philippine Stock Exchange, JG Summit, Inc., as well as major hotels and shopping malls.
Sources said Robinsons Land will build East of Galleria, a 45-storey residential condominium, on the newly purchased lots.
The new building will stand near the Gokongweis’ headquarters, its Robinsons Galleria shopping mall, and two hotels.
The project, sources said, will be launched on Nov. 8 with construction set to start in 2008.
The turnover for the 700 units of the condominium project is slated in June 2010.
Wednesday October 12, 11:44 AM
Toys R Us to Open Outlets in Philippines
Toys R Us Inc., a U.S.-based toy chain, will open its first four outlets in the Philippines next year, its partner company said Wednesday.
The Robinsons Retail Group, which operates a chain of stores in the Philippines, has formed a partnership with Hong Kong's Li & Fung Retailing Group, sub-licensor of Toys R Us in Asia, to bring the toy company to Manila, Robinsons President Lance Gokongwei told reporters.
He refused to provide details on investments and the potential revenue.
The Philippines will be the sixth country in Asia in which Toys R Us operates, in addition to Hong Kong, Malaysia, Singapore, Taiwan and Thailand.
Gokongwei said the longer-term plan is to open Toys R Us stores in key cities of the Philippines.
"After 18 months, I'm sure there will be opportunities to go outside metropolitan Manila," he said.
Toys R Us, the second-largest toy seller in the U.S. was acquired by a private consortium for $6.6 billion in July.
Tama ba 'to?? That means the lots were valued at more than P400k/sqm??
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