SINGAPORE: Another corporate fight is brewing as property and engineering group United Engineers plans to launch a rival bid for WBL Corp at S$4 a share.
United Engineers said the company's growth has reached its peak after the property and construction firm raked in record revenue of S$1.19 billion in 2011.
The company is now looking for more recurring income.
To do that, United Engineers said it has to look beyond its home ground in Singapore for inorganic growth.
That is why it has offered to buy the remaining 61.7 per cent of WBL Corp that it does not own for S$687 million in an all-cash offer.
Jackson Yap, group managing director and chief executive officer of United Engineers Limited, said: "In property development, the earnings could be quite lumpy. When you have the project finishing, you have a spike in your earnings. So we are trying to spread it out and have a more recurring income.
"The auto business offers us that opportunity. It is a great business. We have seen quite good growth for them. We think that that is one of our core businesses if we are looking to take over."
United Engineers is eyeing on WBL Corp's business outside Singapore, particularly in China.
These include automotive, property development, technology and engineering.
Jack Wang from Lexico Advisory said there could be lucrative spin-offs if the acquisition is successful.
Mr Wang said: "You are not just buying one company. You are actually buying three segments of the business which I think if anyone is confident of about the fundamentals, you can spin-off some of the business, and you can get lots of value out of it."
United Engineers has the support from WBL Corp's major shareholders which include OCBC Group, Great Eastern, and the Lee Family.
Together they hold 38.3 per cent stake in WBL Corp.
United Engineers said it will fund the acquisition by internal funds and external borrowings.
WBL Corp's shares were halted for trading on Wednesday. Its shares last traded at S$4.20 apiece.
Major shareholder Straits Trading with some 44.6 per cent stake in WBL Corp has not commented on United Engineers' latest offer.
- CNA/fa
UE plans to launch rival bid for WBL Corp
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UE plans to launch rival bid for WBL Corp
