Sime Darby acquires majority stake in UMW Holdings Berhad

22 Sep 2023 08:00am
Sime Darby’s group executive officer, Daruk Jeffri Salim Davidson.
Sime Darby’s group executive officer, Daruk Jeffri Salim Davidson. Photo by ROSLI TALIB

PETALING JAYA – The acquisition of Permodalan Nasional Berhad's (PNB) stake in UMW Holdings Berhad by Sime Darby Bhd, totaling 61.2 per cent, is expected to transform the leading conglomerate into a new local automotive giant.

This was revealed by Sime Darby’s group executive officer Datuk Jeffri Salim Davidson, claiming that this was done via a conditional share purchase agreement with PNB, adding that the stock acquisition is a suitable action and hopes it will be completed by November.

Jeffri further elaborated that UMW was a prominent conglomerate renowned for its diverse business portfolio encompassing automotive, equipment, aerospace, and manufacturing and engineering (M&E) segments.

“Under the terms of the agreement, Sime Darby will secure PNB's majority stake for a substantial total cash consideration of RM3.57 billion, equating to RM5.00 per share.

“The agreement, once it meets the requisite conditions, will pave the way for Sime Darby to launch a general offer for the remaining 38.8 per cent stake that it does not currently hold, with the ultimate goal of delisting UMW from Bursa Malaysia,” he revealed in an exclusive interview with Sinar at Menara Sime Darby on Thursday.

On top of this, he added that this was such a strategic move to further scale up and strengthen its presence in the Malaysian automotive sector, adding two high-performing brands to its Malaysian portfolio; Toyota and Perodua.

In fact, the inclusion of Toyota and Perodua, which manufacture and distribute automotive components, reduces Sime Darby's exposure to the dealership business, which can be subject to market fluctuations.

“This strategic vision of merging the two companies had been on Sime Darby's radar for many years. Even in 2006, during the merger with plantation companies, discussions revolved around the possibility of integrating UMW. However, these talks did not materialise at the time.

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“The deal will cement Sime Darby’s position as Malaysia’s leading automotive player. As a partner of choice for some of the most admired brands in the automotive sector, we are very excited to have the opportunity to work with Toyota, one of the world’s largest and most respected automakers,” he added.

Sime Darby's strategic motivations behind this acquisition are multi-faceted. This allows the company to rebalance its business, as its overseas ventures have grown significantly while its Malaysian business has dwindled to around 15 per cent.

“By acquiring UMW, Sime Darby aims to create a more balanced business landscape with roughly 30 per cent each in Malaysia, China, and Australia.” “Besides that, the company anticipates completing the purchase of PNB's stake within three months from the date of the SPA, subject to the necessary regulatory approvals as well as the approval of shareholders and customary closing conditions.

He revealed that Sime Darby's bold move to acquire a majority stake in UMW Holdings Berhad underscores its commitment to expanding its footprint in the Malaysian automotive sector and consolidating its position as a major player in the industry.

“As the deal progresses, it will be closely watched for its implications on Malaysia's corporate landscape and the broader automotive industry.”