RI takeover boosts Singapore's Econ
RI takeover boosts Singapore's Econ
SINGAPORE (Reuter): A takeover bid by Indonesian businessmen
sent shares in a small Singapore construction company soaring
yesterday, focusing attention on a recent surge of Jakarta
investment into the island's stock market.
Econ International Ltd shares rocketed almost 50 percent to an
all-time high of Singapore $2.05 (US$1.46) after news that
Indonesian-owned Yenville Pte Ltd had offered S$1.46 per share
for the company on Wednesday evening.
More than 72 million shares, including 60 million off-market
block deals, were traded in Econ in the first two hours alone --
almost half the entire volume on the Stock Exchange of Singapore.
Before the bid was announced, Yenville owned 46.71 percent of
Econ's shares and 33.69 percent of the company's warrants. It is
too early to tell how many shareholders will respond to the
offer.
The bid is the latest in a long-line of high-profile takeovers
by Indonesian entrepreneurs who are moving into Singapore to take
advantage of its strong currency and low interest rates to expand
their businesses.
"Econ may be a good target for the Indonesians," said William
Cliffe, the manager of institutional sales at DBS Securities. "It
is a specialist construction company with good margins, but it is
small and will probably be a good base for expansion."
Control
Like many other recent targets of Indonesian investors, Econ
is fairly inexpensive to control.
Floated in October, 1994, for just 90 cents (64 U.S. cents) a
share, its 131 million shares were worth just S$1.28 (91 U.S.
cents) each until last week, when trading was suspended on August
17. At that price a controlling half-share would cost under S$85
million ($60.70 million).
Its business, engineering and piling, is very similar to
another recent acquisition, construction company L&M, which was
bought two weeks ago by a group led by Indonesian President
Soeharto's son Bambang Trihadmodjo.
Econ also has subsidiaries in several other Asian growth
economies, including Vietnam and China.
Yenville is owned, via a holding company, by a group of
Indonesians including Andry and Wilson Pribadi, related to Henry
Pribadi, who recently bought a large stake in property group
Amcol Holdings.
Analysts say small Singapore firms are an attractive target
for Indonesian investors who want a secure foreign base nearby.
"Singapore is next-door. It is well-managed and there are a
large number of small companies on hand available to take over,"
Cliffe said. "And interest rates here are fairly low. Much of the
money used for the purchases is not Indonesian, but borrowed
locally at attractive interest rates."
Dealers said this factor was probably responsible for the huge
rise in Econ's share price, well above the offer level, after
news of the bid was announced.
By the midday close on Thursday, Econ shares stood at S$1.83
($1.31), up 40 cents (26 cents). Warrants in the company were at
S$1.25 (89 cents), up 41 cents (27 cents).