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LAST month, it bought venerable retailer Robinson & Co. Now, Indonesia's Lippo Group has snapped up the Meritus Mandarin hotel, OUB Centre and Change Alley Aerial Plaza and Tower in a $1 billion deal - adding to its burgeoning collection of Singapore assets.

The sellers were the Republic's second largest bank, United Overseas Bank (UOB), and three of its associate companies - all controlled by veteran banker Wee Cho Yaw.

These companies had controlled the properties via a collective 55 per cent stake in Overseas Union Enterprise (OUE), a listed hotel and resorts group. In an announcement yesterday, UOB said the stake had been sold to the Lippo Group.

Lippo is controlled by the Riady family, known for its majority stake in Indonesia's largest retailer Matahari and a string of property developments in Asia.

It is entering into this deal with an equally prominent joint-venture partner:

Malaysian tycoon Anandan Krishnan is the second richest man across the Causeway, with a net worth of US$4.6 billion (S$7.2 billion), according to Forbes Asia.

The two will now have to mount a mandatory general offer for OUE shares that they do not already own, after they breached the 30 per cent limit following yesterday's purchase.

The general offer is advised by BNP Paribas Peregrine.

The deal comes at a perfect time for Mr Wee, who needs to sell UOB's non-core assets by July 17 to comply with local banking regulations.

Local banks are not allowed to hold more than 10 per cent of businesses that are non-financial in nature, a requirement that was spelt out by the Monetary Authority of Singapore (MAS) in 2001.

Prior to the divestment, UOB held 32.58 per cent in OUE, which is considered a non-core asset for UOB. UOB and another associate company, Overseas Union Facilities, also directly own a 16.67 per cent stake in OUB Centre, another non-core asset. This is also being sold to the Lippo-led joint venture via a separate transaction.

UOB said in a statement yesterday that the OUE stake sale translates to a price of $10.20 for every OUE share, which is a 7.94 per cent premium over OUE's last traded share price of $9.45 on Thursday.

The offer price was arrived on a 'willing-buyer and willing-seller' basis, it added.

OUE came under UOB's control after the latter bought Overseas Union Bank (OUB) in 2001. It owns several properties and hotels in China and Singapore.

Divesting it made UOB the second local bank to have had dealings with Lippo in the past six weeks.

Last month, Lippo paid $203 million for OCBC Bank's 29.9 per cent stake in 148-year-old Robinson, making it the biggest shareholder of the retailer, which operates brands like John Little and Marks & Spencer.

Both banks made a tidy profit from the sales, with UOB recording the bigger gain of the two. UOB said it will realise a consolidated gain of $353.5 million from the OUE divestment in the second quarter of its financial year ending Dec 31, but it added: 'The UOB board of directors has not decided on the intended use of the proceeds.'

Shareholders like Mr Denis Distant are looking forward to a bigger cash dividend payout.

'We were expecting a dividend in specie of OUE shares before. But now since OUE has been sold off to Lippo, we expect a generous special dividend from UOB,' he said.

Lippo deputy chairman Stephen Riady told The Business Times on Friday that the group has plans to enhance the value of the OUE assets it now controls.

It is planning to increase the retail space at Meritus Mandarin.

And some have noted that Change Alley Plaza and Tower, together with Overseas Union House, can be redeveloped into a prime waterfront commercial development.

azrin@sph.com.sg

'We were expecting a dividend in specie of OUE shares before. But now since OUE has been sold off to Lippo, we expect a generous special dividend from UOB.'

- SHAREHOLDER DENIS DISTANT