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UOL’s share swap agreement could unlock further value

Jeffrey Tan Published on Fri, Jun 30, 2017 / 3:08 PM GMT+8

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(July 3): The two property developers in our Singapore Market Portfolio have performed well since they were added earlier this year. So far, our position in UOL Group has returned 10.2% while that in CapitaLand has returned 15%. As the property industry is expected to recover, both companies appear set to continue their positive performance. But UOL has yet another thing going for it.

On June 22, UOL announced it had signed an option agreement with Haw Par Corp — the company known for its Tiger Balm ointment. The agreement gives UOL a call option and Haw Par a put option. Upon the exercise of either option, UOL will allot and issue 27.27 million new shares to Haw Par in exchange for 60 million shares in property developer United Industrial Corp (UIC).

UOL says the proposed transaction will enable it to acquire a “significant” minority interest in UIC, something that the lack of trading liquidity in UIC shares has prevented UOL from doing. UOL adds that it intends to consolidate its interest in UIC and achieve statutory control of the latter in the “future”.