UMW’s bid to take control of Perodua has hit a snag. The Star reports that Perodua’s “Japanese principals” are not in favour of UMW holding an overwhelming stake in the Malaysian auto market leader.

This was revealed by MBM Resources (MBMR) chairman Datuk Abdul Rahim Abdul Halim, who said he saw a letter from the Japanese stating their opinion on the matter. “We have sighted a letter from the Japanese principals stating they are not in favour of any one company holding a majority stake in Perodua,” he said.

Perodua has a longstanding “happy marriage” (as often described by Perodua president and CEO Datuk Aminar Rashid Salleh) with Daihatsu of Japan, which together with Daihatsu (Malaysia) Sdn Bhd, Mitsui & Co Ltd and Mitsui & Co (Asia Pacific) Ltd, hold about 30% stake in Perodua.

UMW is the biggest shareholder in Perodua with a 38% stake, followed by MBMR with 22.58% and PNB Equity Resources (PER) with 10%. The conglomerate, which is Toyota’s local partner, last month proposed to acquire PER’s stake in Perodua and take over MBMR. If both deals go through, UMW will have about 70.6% equity interest in Perodua.

UMW has offered RM417.5 million for PER’s 10% stake and RM2.56 per MBMR share. The latter, which is controlled by Med-Bumikar Mara (just above 50%), rejected UMW’s offer at the end of last month. UMW has responded by extending the offer for another month until end April.

The report says that Med-Bumikar Mara is a private company owned by Majlis Amanah Rakyat (Mara) and six family-owned companies. It is said that while Mara is the single largest shareholder in Med-Bumikar Mara (29%), the six families collectively own close to 70%. Mara is for accepting UMW’s offer, but the other shareholders are against it.

This reason for this is simple – valuation. UMW’s offer values MBMR at just over RM1 billion, but MBMR’s stake in Perodua alone is worth RM950 million (direct and indirect). The company is also a franchise holder and distributor of Hino trucks, and has interest in car dealerships and auto parts makers, besides owning properties.

What is UMW’s next course of action? A separate report by The Star says that UMW is looking at how to improve its offer to Med-Bumikar Mara, which aside from MBMR’s stake in Perodua, has a 2.55% indirect interest in the carmaker via Daihatsu (Malaysia) Sdn Bhd. The report’s sources say that the option to increase the offer price for MBMR shares is not an option for UMW.

“UMW is already calling on a rights issue to raise up to RM1.1 billion to finance the takeover of MBMR. Increasing the price is not something that the board would consider,” the source said, adding that UMW could instead make an offer for MBMR’s Perodua stake alone as opposed to buying the whole company.

“There could be other sweeteners for MBM shareholders. UMW could offer MBM some special deal as the distributor of Perodua cars and supplier of parts,” a source explained. It could also improve the share swap offer – currently at 21 UMW shares for every 50 MBM shares – to further tempt MBMR shareholders.

It’s turning into a mega tussle for a mega asset. Who will blink first?