KUALA LUMPUR – UEM Group Bhd has proposed a merger between its unit, UEM Sunrise Bhd, and Eco World Development Group Bhd to create one of Malaysia’s largest property companies.
It said the merger between its 66.1%-owned subsidiary and Eco World will create an opportunity for an existing government-linked company to be in partnership with the private sector and create a major property developer, with a projected gross development value of RM173.2 billion and a total landbank of more than 6,880ha.
UEM Group is wholly owned by Khazanah Nasional Bhd.
“The group believes that industry consolidation will create value for all shareholders,” it said in a statement today.
“Against a backdrop of subdued macroeconomic conditions that has been further disrupted by the Covid-19 pandemic, there is a pressing need for local property developers to improve the robustness of their businesses by pooling resources and capabilities to strengthen their performance and long-term sustainability.”
It said the boards of the two companies in question will independently consider the merits of the proposal and decide whether to pursue further discussions.
Should they reach an agreement, it will result in an enlarged UEM Sunrise, and new shares and warrants will be issued in exchange for those of Eco World.
The enlarged firm will retain its listing status on Bursa Malaysia, and UEM Group will remain its single largest shareholder with a 43% stake. The substantial shareholders of Eco World, meanwhile, will hold a 24.2% equity stake.
Government-linked investment companies – including UEM Group – will collectively hold a stake of more than 50%.
At 10.45am, UEM Sunrise’s shares rose 5 sen to 41 sen, with 12.89 million units transacted, while Eco World’s shares increased 3.5 sen to 43 sen, with 21.83 million units changing hands. – Bernama, October 5, 2020
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