Mergers & Acquisitions

Repsol acquires 40% stake in Singapore’s United Global unit

Repsol acquires 40% stake in Singapore’s United Global unit
Photo courtesy of United Global Limited

United Global Limited, a lubricant blender and manufacturer in Singapore and Indonesia, announced on 30 September that Spain’s Repsol Downstream Internacional S.A., a subsidiary of Repsol S.A., an international oil and gas company listed on the Madrid Stock Exchange, has signed a share purchase agreement to acquire a 40% equity stake or 14,959,600 shares in the company’s wholly-owned subsidiary, United Oil Company Pte. Ltd.

Repsol will pay USD36.5 million in cash on an enterprise value cash-free and debt-free basis, subject to net debt and working capital adjustment upon the completion date. In addition, a potential deferred consideration of USD10.0 million based on certain milestones achieved by 2023 was agreed upon.

Repsol Downstream is principally engaged in the production and marketing of oil derivatives, while UOC and its subsidiaries blends, manufactures and distributes lubricants in Singapore and Indonesia.

The agreement was reached on a willing-buyer, willing-seller basis, after taking into consideration, among others, the net assets of UOC Group, the strategic value of UOC Group to Repsol and vice versa, and the potential earnings of UOC Group.

United Global and Repsol intend to complete the agreement before the end of 2019, after obtaining the necessary approvals and fulfillment of agreed-upon conditions. Upon completion of Repsol’s acquisition, UOC will cease to be wholly owned by the company, and instead, will become a joint-controlled entity with Repsol.

United Global believes that its strategic partnership with Repsol, a global energy company with a strong international brand, will result in new growth opportunities for both companies.

“After months of discussions and extensive due diligence, we are pleased that an oil major such as Repsol would decide to invest in the vision and growth of our company. We are excited by the synergy between the two firms and the opportunities this would provide to, inter alia, accelerate our growth in this region and increase business volumes. As a 60% shareholder of this joint venture, we believe that this strategic partnership will bring significant economic value to United Global,” said Jacky Tan, United Global CEO.

Moving forward, UOC Group will manufacture and supply Repsol branded products in Singapore, Indonesia, Malaysia, and Vietnam.

“We are very pleased to begin cooperation with United Oil Company that I am sure will be very fruitful. Together we can expand our business through the strength of our brands and networks, offering quality products and service throughout the Asia-Pacific region,” said Maria Victoria Zingoni, Repsol’s Commercial Businesses and Chemicals Executive managing director.

“The proposed disposal will also enable United Global to partially realise the value of our investments in the UOC Group, which will, in turn, allow United Global to diversify into other activities for the group’s expansion into sustainable long-term businesses. We may do this by way of mergers and acquisitions, joint ventures, as well as establishing new lines of business, Tan said.

United Global will utilize the cash proceeds from the sale to fund future business expansions, investments, and acquisitions, as opportunities arise.

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