SINGAPORE — United Engineers Ltd shares dropped the most in 17 years after plans by Thailand’s richest man to acquire the property and construction company failed.
The shares dropped as much as 17% and were 15% lower at S$2.68 as of 12.20pm local time Monday, the biggest decline since January 1998.
Oversea-Chinese Banking Corp. and its insurance arm, Great Eastern Holdings Ltd, which own controlling stakes in United Engineers, said in a joint statement on Feb 14 that the period for exclusive talks with TCC Top Enterprise Ltd had expired as the companies were not able to reach an agreement.
TCC Top Enterprise, a company owned by Charoen Sirivadhanabhakdi, Thailand's richest man, started examining the finances of United Engineers last year for a potential acquisition.
Mr Charoen's TCC began due diligence on United Engineers and its WBL Corp unit in December, people familiar with the talks said then. Exclusive talks with minority shareholder OCBC and its insurance arm expired six weeks after due diligence started.
"The failure of the talks has resulted in the selloff as investors were expecting the deal to go through," Goh Han Peng, a Singapore-based analyst at DMG & Partners Securities Pte, said by phone. United Engineers will continue to look for other potential investors, he said.
United Engineers has been divesting assets after buying Singapore-based builder WBL Corp in 2013 for $725 million including debt. It reached a deal in October to sell a majority stake in an engineering and construction business, UE E&C Ltd In August, United Engineers agreed to sell its car-dealership unit to Malaysia's Samling Group and its MFS Technology business.
OCBC, Great Eastern and the bank's founding Lee family own a combined 34.1% of United Engineers, according to a filing. Under Singapore rules, buying more than 30% would trigger a mandatory takeover offer for United Engineers, which has a market capitalization of S$1.74 billion ($1.3 billion).