Who blinks first
IT’S a question of who will blink first, Med-Bumikar Mara Sdn Bhd and its wholly-owned subsidiary, Central Shore Sdn Bhd, who collectively hold some 50.07% stake in MBM Resources Bhd, or UMW Holdings Bhd, which made an offer to buy all the shares held by MedBumikar and Central Shore.
Although Med-Bumikar and Central Shore rejected UMW’s offer, the company has extended the acceptance period for the offer to April 30 from March 28. This is to allow them to change their minds, which many believe they won’t.
UMW, a company that has been in the red three years in a row, made the offer to buy all the ordinary shares in MBM held by MedBumikar and Central Shore for RM501mil, or RM2.56 per share. An offer that also values the entirety of the company at almost RM1bil.
The problem is that the offer is too low, even if the major shareholders of MBM did not specifically say so. The offer only takes into account MBM’s 22.58% stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua), which probably is the main reason why UMW made the offer in the first place. That stake alone is valued at close to RM950mil.
Besides making the offer to buy over Med-Bumikar’s and Central Shore’s stakes, UMW also plans to buy another 10% stake in Perodua for RM417.5mil from the private equity investment arm of Permodalan Nasional Bhd. UMW is currently the single largest shareholder in Perodua with a 38% stake.
If both deals were to go through, UMW will effectively hold a 70.6% stake in Perodua, a company whose monthly market share of vehicles sold reached a record high of 40% in January. Perodua has been the market leader for passenger vehicles for years and a larger stake simply means more revenue for UMW.
That’s something to think about besides MBM’s dealerships in Volvo cars and trucks, as well as for Daihatsu and Hino commercial vehicles. UMW assembles and distributes Toyota and Lexus vehicles.
There’ll be synergies between MBM’s auto parts business and UMW’s manufacturing arm, which also produces automotive components.
The people behind Med-Bumikar and Central Shore know this and are holding out for a better deal.