A person familiar with the deal told Dow Jones Newswires that UEM Land, owned by state-controlled UEM Group, and Sunrise-- a developer of high-end real estate in Kuala Lumpur--plan to sign a share exchange agreement that will be announced tomorrow.
He declined to provide further details of the transaction.
Property analysts say a collaboration between the two companies is "positive and synergistic" but would rather wait for further details of the deal before making further comments.
"Sunrise has expertise in developing premium properties but most of their land bank is concentrated in Kuala Lumpur... a link-up with UEM Land, which has substantial land acreage in Iskandar (in southern Johor state), makes it very synergistic indeed," said an analyst with a foreign brokerage who declined to be named.
"It will also depend on how much of a role the current management of Sunrise will play in the new venture... Sunrise is highly successful in selling its high-end properties primarily due to its capable management team," he said.
Maybank analyst Wong Wei Sum said that as the deal structure hasn''t been revealed, it would be hard to assess the financial impact for either company. "It all depends on the valuation, but we have a fair value of MYR2.80 for Sunrise at the moment and we are positive on Sunrise''s fundamentals," Wong said.
Sunrise, controlled by investment analyst turned property developer Tong Kooi Ong, has market capitalization of MYR1.2 billion and a land bank of 587 acres in Malaysia, according to its website. The firm has recently expanded overseas with its maiden project in Canada.
UEM Land has market capitalization of MYR8.2 billion and is one of the largest property developers in Malaysia. It is currently developing some 15,000 acres in Iskandar and has over 5,000 acres available for future development. The company is also involved in a development in Cyberjaya, south of Kuala Lumpur.
UEM Land posted net profit of MYR114.6 million on revenue of MYR403 million in 2009, while Sunrise reported a net profit of MYR134.0 million on revenue of MYR590.7 million for its fiscal year ended June 30.
Trading in the shares of the two companies was suspended Wednesday pending an announcement. UEM Land shares ended Tuesday at MYR2.26, while Sunrise closed at MYR2.52.
-By Elffie Chew and K.P. Lee; Dow Jones Newswires; (603) 2026 1233; firstname.lastname@example.org, email@example.com