By Liz Lee
KUALA LUMPUR, Oct 5 (Reuters) – Malaysian property group UEM Sunrise Bhd UMSB.KL said on Monday it will review merging with Eco World Development Group Bhd ECOW.KL after the idea was proposed by its major shareholder UEM Group.
UEM Group, which owns 66% of UEM Sunrise, is owned by Malaysia’s sovereign wealth fund Khazanah Nasional. It said in a letter on Friday that there was a “pressing need” for consolidation due to “subdued macro-economic conditions and market headwinds”.
UEM Sunrise, whose shares rose 6.94% on Monday, told Reuters its board will review UEM Group’s proposal. Eco World, whose shares were up 5.06%, said in a Facebook notice that it will convene a board meeting soon to deliberate the matter.
“On the surface it looks like a win-win, as both could achieve sustainability in the current tough market. If market continues to be weak, equity holders could suffer,” an analyst at a bank-backed research house said of the proposal.
Eco World would become a wholly-owned subsidiary of UEM Sunrise and its shares delisted if the proposed tie-up, via an exchange of shares and warrants for new shares and warrants in UEM Sunrise, goes ahead.
(Reporting by Liz Lee; Editing by Rashmi Aich and Alexander Smith)
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