Trouble looms over proposed UEM Sunrise-EcoWorld merger

KUALA LUMPUR – The resignation of two UEM Sunrise Bhd (UEMS) board members points to a messy turn of events after it publicly disclosed a merger proposal with competitor EcoWorld Development Bhd (ECW), people familiar with the matter tell the Vibes.

Anwar Syarin Abdul Ajib stepped down as managing director and chief executive officer yesterday while Subimal Sen Gupta S. C. Sen quit as independent director and chairman of the audit committee on Wednesday. 

“We expected fire but not at this level,” a source said. Other insiders said UEMS’ board had raised questions that had yet to be answered, including whether there was sufficient stress testing over EcoWorld’ land banks. 

“The consensus has been that the merger is not necessary,” said a source, but sovereign wealth fund Khazanah Nasional Bhd, the sole shareholder of UEM Group which in turn owns 66% of UEMS, may have aggressively pushed this through “since UEM Group is just the vehicle”. 

But insiders panned talks of EcoWorld co-founder Tan Sri Liew Kee Sin being a fixture in the board or management of the merged company.  

Ever since rumours of the merger made rounds last year, Liew had been the bogeyman for so-called Malay rights’ activists and politically linked personalities who played up his ethnicity as a sign that Khazanah was bailing out a company run by a Malaysian Chinese. 

“As far as we can tell, the answer is no. Liew will not have a managerial role in the merged company,” the source said.  

According to UEM Group’s press statement on Monday announcing the deal, board composition and key management of the merged entity, which is an enlarged UEMS, would be determined by an integration committee consisting of UEMS and EcoWorld representatives.  

The proposed UEMS-EcoWorld merger will be carried out through share and warrant swap. Upon completion, UEM Group will remain the single largest shareholder of the merged entity with 43%. 

UEM Group’s sales pitch is the combination of two property heavyweights would create “one of Malaysia's largest property companies, a best-in-class multi-product developer with strong capabilities in every segment of the industry to sustain long-term value creation and growth”. 

The merged entity, according to UEM Group, would have a projected gross development value of RM173.2 billion and a combined land bank totaling 6,879ha locally. – The Vibes, October 10, 2020