Hong Kong's Guoco to bid for Bil, sources say

SINGAPORE - Hong Kong property group Guoco is set to make a full buy-out offer for BIL International in a deal that would value the owner of the UK's Thistle Hotels group at as much as to $S1.8 billion ($1.62 billion), sources said.

Controlled by Malaysian tycoon Quek Leng Chan, the cash-rich Guoco Group bought a 10 per cent BIL stake for $S166 million from private equity firm Longleaf, one source familiar with the deal said. Quek now must make a general offer as he has crossed the takeover threshold of 30 per cent under Singapore law.

BIL's main asset is the Thistle hotels group, which it took private in 2003 for 627 million pounds ($1.6 billion). Thistle's website lists 49 hotels, including 20 in London.

BIL was formerly known as Brierley Investments Ltd and founded in 1961 by corporate raider Sir Ron Brierley of New Zealand.

"They (Guoco) are going to make a general offer for BIL. The offer price could be between $S1.25-$S1.30 (a share)," a banking source said.

At $S1.30 a share, Guoco Group's offer would value the Singapore-based investment company at a premium of 6.5 per cent over BIL' Tuesday closing price of $S1.22.

Quek bought about 138.5 million shares in BIL in a block trade at $S1.20 a share earlier on Wednesday, just minutes before the stock was suspended from trading, the first source said.

"They can offer at $S1.20, which is the price they gave Longleaf or it can be higher," said the source.

The magnate, who controls about 65 per cent of Guoco through various vehicles, made his money from selling Hong Kong's Dao Heng Bank to Singapore state-controlled lender DBS Group Holdings Ltd for $S10 billion in 2001. He has not made any major acquisitions after the Dao Heng sale.

For the takeover to succeed, Quek would also have to try and buy another block from Singapore businessman Oei Hong Leong who holds about 10 per cent of BIL.

Quek controls less than 30 per cent of BIL through various channels including Camerlin Group and Guoco Group Ltd.

The price for Longleaf's stake is close to the group's net tangible asset is US73c a share ($1.08), according to BIL's last published results for the period ended March 31.

Shares in BIL last traded in New Zealand yesterday at $1.04 -- against a year high of $1.07, before being suspended pending an announcement.

Analysts said that at around $S1.20, Quek's offer for BIL was unlikely to succeed with many property companies trading at a premium to their NTA.

Guoco Group shares are also suspended from trading in Hong Kong pending an the announcement of a possible major transaction.

Camerlin shares were also suspended in Kuala Lumpur pending a material transaction.

- REUTERS