Union Gas Holdings has received strong shareholder support for its proposed acquisition of assets owned by Union Energy Corporation (UEC), with 99.7% votes received in favour of the proposal at an extraordinary general meeting on Dec 27.
Following an earlier announcement on Aug 25, the proposed acquisition of Sembas (Asia) Trading, Semgas Supply, and Summit Gas Systems will pave the way for the strategic upstream expansion of Union Gas’ liquefied petroleum gas (LPG) business segment into the bottling and storage business, the company said in a statement.
Targeted to be completed by Dec 31, the proposed acquisition is at a consideration of $75 million. It involves the purchase of assets comprising two bottling plants and a sizable amount of support infrastructure including six LPG storage depots, 71 delivery vehicles and an entire commercial and industrial sales team.
It will also give Union Gas ownership of two out of the four bottling licences and bottling plants in Singapore, making it one of the largest LPG players with the largest bottling operations in the city-state.
The proposed acquisition is earnings accretive and expected to improve Union Gas’ business and financial performance, the company said.
“We are glad that shareholders recognised the long-term value and potential returns that the proposed acquisition will bring to the group and look forward to the positive impact that we expect it to have on our performance. With control of the whole LPG chain, it gives us an enlarged platform to do more and grow more,” said Union Gas executive director and CEO Teo Hark Piang.
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The consideration will be satisfied on a part cash, part shares basis. $61 million or 81.3% of the consideration will be satisfied through the allotment of 88.6 million ordinary shares in Union Gas at the issue price of 68.81 cents per share, while the remainder will be settled in cash via Union Gas’ internal resources.
As at 3.01pm, shares in Union Gas are trading 1.5 cents lower or 1.96% down at 75 cents.
Photo: Union Gas Holdings
