Perodua and Toyota to join Sime Darby in RM3.57 billion UMW deal – SD TIV market share up to 55%

Sime Darby (SD) says its acquisition of Permodalan Nasional’s (PNB) 61.2% stake in UMW Holdings for RM3.57 billion in cash will allow it to scale up and strengthen its presence in the Malaysian automotive sector.

The conglomerate said the move, which will add high-volume mass-market brands Toyota and Perodua to its portfolio, will allow it to scale up its operations in Malaysia, balancing any geopolitical risks in the region from its two key markets, namely China and Australia.

Its group CEO, Datuk Jeffri Salim Davidson, told Bernama the acquisition will complement SD’s existing automotive portfolio. Its Sime Darby Motors (SDM) division is a major player in the industry as a franchise holder for brands ranging from Porsche to BYD.

Perodua and Toyota to join Sime Darby in RM3.57 billion UMW deal – SD TIV market share up to 55%

“UMW is already a dominant automotive player with a 52% share of the local market, and the exercise is expected to bring the share up to 55%. The enlarged entity will create greater value for all our stakeholders and allow us, as a Malaysian multi-national company, to play a better role in growing the national automotive industry,” he told the national news agency.

He added that the acquisition of the stake in UMW will provide SD with access to Toyota’s ecosystem, creating fresh opportunities for the group to grow in new geographies. The move will also strengthen the group’s traction in segments such as used cars, aftersales and assembly, due to the large volumes that it will command.

“Besides broadening our earnings base, our presence in other parts of the value chain creates resilience against changing retail models,” he said. As for Perodua, Jeffri said the automaker holds a dominant market share in the local automotive industry and as such, is the largest value component in the transaction.

Perodua and Toyota to join Sime Darby in RM3.57 billion UMW deal – SD TIV market share up to 55%

He added that the acquisition will also bring Toyota Forklifts into SD’s portfolio, allowing it to move into a high-growth material handling business, which is presently being fuelled by the e-commerce boom. “Materials handling will add another dimension to our industrial division, to complement our mining and construction exposure,” he said.

Jeffri said the group will undertake a thorough review of UMW’s portfolio of brands to assess the compatibility against its existing portfolio, ensuring that SD continuously maintains a strong spectrum of products and services to enhance value for its shareholders.

“One of the first steps in our post-acquisition integration plan focuses on a seamless transition and integration, while leveraging the strengths of both companies and all the brands within,” he said.

Perodua and Toyota to join Sime Darby in RM3.57 billion UMW deal – SD TIV market share up to 55%

He said the post-acquisition integration would have minimal operational disruptions, as the group is committed to maintaining the integrity of Sime Darby and UMW and capitalising on synergies. “We care deeply about our commitment to all principals. We will manage each brand separately and continue to build on the excellent work with our enterprising spirit and forward-thinking mindset,” he explained.

On the topic of workforce and equity participation, Jeffri said that given that PNB remains a significant shareholder of Sime Darby, the Bumiputera interest in the businesses will remain intact. “Additionally, the vendor and supplier ecosystem for Toyota and Perodua will remain and there are Bumiputera equity requirements to ensure Bumiputera participation along the value chain,” he said.

As for the funding of the acquisition, Jeffri said it will be funded primarily by bank borrowings and internal funds, which will see the strategic disposal of non-core assets for this purpose. Once the agreement becomes unconditional, he said SD will be making a general offer to acquire the remaining 38.8% stake in UMW, with the aim of delisting UMW from Bursa Malaysia. He said that the group expects to complete the takeover by end-February 2024.

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