What: The share price of diversified services company UGL Limited (ASX: UGL) has sunk nearly 14% by mid-morning today, taking the market capitalisation of the once high-flying stock down to near the $1 billion mark.
The cause of the fall is not exactly clear and it's likely only a matter of time before UGL receives a "speeding ticket" from the ASX. There are two pieces of news out today which are probably responsible for the falls.
Firstly, UGL has announced a deal which will see GDI Property Group Ltd (ASX: GDI) acquire six industrial properties and one office property from UGL on a sale and leaseback basis for a total purchase price of $66.5 million.
Secondly, a column in The Australian Financial Review reports that broker Credit Suisse is suggesting that UGL is more likely to sell its property services business DTZ rather than spin it off in a demerger.
So what: According to Credit Suisse a sale of DTZ could fetch $1.4 billion which is more than the current entire market capitalisation of UGL. Based on its break-up value Credit Suisse has put a value on UGL of $8.10 per share, which is a significant premium to the stock price which has fallen over $1 today to be trading at $6.58.
Now what: Given that the cause of this morning's falls are not yet clear, investors would be advised to wait until more information comes to light. With the stock back near its 52-week low and corporate activity on the rise, UGL is a stock worth keeping a close eye on as a buying opportunity could emerge sooner rather than later.
