UMW outlines key benefits from takeover of MBM and Perodua

PETALING JAYA: UMW Holdings Bhd is upbeat on its proposed acquisitions of MBM Resources Bhd and an additional stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua), as this will immediately raise the group’s earnings, says CIMB Equities Research.

During a briefing for analysts and fund managers, the research house said UMW highlighted four key benefits from the proposed acquisitions. Firstly, UMW’s strategic stake in Perodua will increase from 38% to 70.6%.

“We understand that UMW plans to consolidate its stakes in MBM and Perodua upon completion of the deal, but it needs the approval of the respective companies’ principals to proceed with the deal,” it said.

Secondly, UMW’s exposure in the commercial vehicle segment will increase via MBM’s multi-brand dealerships (Daihatsu and Hino).

Thirdly, the company expects the acquisitions to widen its offerings in the manufacturing segment by integrating MBM’s auto parts-manufacturing business for compo- nents like wheels and safety products, as well as noise, vibration and harshness products.

For example, UMW sees the potential for these auto component makers to become its vendors.

Finally, UMW believes the combined entity will have better prospects in the automotive industry, leveraging on Perodua’s strength in the national car segment and UMW’s position in the non-national car segment through Toyota.

“Furthermore, we understand that UMW is exploring the possibility of selling non-core dealership marquees that may compete with its existing Japanese principals, Toyota and Daihatsu,” it said.

CIMB Research said UMW also did not intend to raise its current offer price for MBM, which is already at a 13.3% premium over the five-day volume weighted average price.

“We keep our forecasts pending MBM’s acceptance of UMW’s offer, resulting mandatory general offer and UMW shareholders’ approval,” it said.