An investment firm representing the main stockholders of United Global Ltd. announced on Dec. 10 an unconditional cash offer to acquire the rest of the company’s stock in hopes that it will be able to remove the company from Singapore’s stock exchange.
The offer by DMW Investments Pte. Ltd., also incorporated in Singapore, is to acquire all the issued and paid-up ordinary shares of United Global for Singapore 45 cents (U.S. 33 cents) per share. If the acquisition goes through, DMW said it planned to delist the company from the Singapore Exchange.
United Global has 316.2 million shares, but four DMW shareholders already hold 262.2 million shares in United Global, or about 83%, leaving only 17% left to acquire, at a cost of approximately S$24.3 million.
DMW said it would set out the full terms and conditions of its offer in a dispatch to shareholders not earlier than Dec. 24 and not later than Dec. 31. United Global’s board appointed an independent financial adviser to advise the company’s directors about the offer.
Part of DMW’s rationale for the acquisition offer is low trading liquidity of shares in United Global, saying “the offer therefore provides shareholders who find it difficult to exit the company as a result of the low trading volume in the shares with an opportunity to liquidate and realize their investment in the shares at a premium to the prevailing market prices, which may otherwise not be available given the low trading liquidity of the shares.”
The investment company said it was making the offer with a view to delist United Global from the Singapore Exchange, known as SGX. Privatizing United Global will give DMW and the management of United Global more flexibility to manage its business, optimize the use of its management and capital resources and facilitate the implementation of any operational change.
“In maintaining its listed status, the company incurs compliance and associated costs,” DMW said about United Global. “In the event that the company is delisted from the SGX-ST, the company will be able to save on expenses relating to the maintenance of a listed status and focus its resources on its business operations.”
DMW said that – subject to normal business conditions – it did not intend to make major changes to the business of the company or its management team, redeploy the fixed assets of the company or discontinue employment of people working for the company or its subsidiaries. In addition to the joint venture with Repsol, United Global has wholly owned operations that trade base oils and supply lubricant additives. It also has four other business pillars: United Supply Chain, which is involved in logistics and shipping; United Innovations, which manufactures nano-fiber oil absorbent materials; United Fuels, which trades petrol-related products; and United Renewables, which looks for opportunities in materials recycling and sustainability.