umw holdings set for a hostile takeover of perodua

UMW Holdings set for a hostile takeover of Perodua

Two share purchases tabled that would see it net a 70.6 per cent stake in P2

Dinesh Appavu Photo

Dinesh Appavu

12 Mar 2018

A hostile takeover is the acquisition of one company (called the target company) by another (called the acquirer) that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved.

Perodua could potentially be on the receiving end of a hostile takeover by UMW Holdings by means of the former in the definition above. The latter has tabled two separate share purchase offers that could see its stake in the country’s best-selling carmaker climb to a controlling 70.6 per cent over the current 38 per cent.

Act one in the move is a RM501 million bid for a 50.7 per cent stake in auto trading and auto parts manufacturing company MBM Resources that holds an interest in the distribution or dealerships of Volvo, Daihatsu, Volkswagen, Mitsubishi and Hino here. It also has a parts manufacturing arm.

The proposition will trigger a mandatory offer for the rest of the shares. MBM Resources currently holds 22.58 per cent of Perodua. If the deal goes through, UMW Holdings will then have a 60.6 per cent stake in Perodua in its portfolio.

Act two is the acquisition of a 10 per cent stake in Perodua from Permodalan Nasional Berhad (PNB) at the cost of RM417.5 million that would raise the overall shareholding to 70.6 per cent in Perodua.

“The proposed acquisitions are consistent with the company’s strategy to enhance its core businesses in the automotive, equipment and manufacturing and engineering segments,” was the statement in its filing to Bursa Malaysia. The filing went on to dictate UMW Holding’s interest in a controlling stake in Perodua and access to MBM Resources’ network of commercial vehicles under the Hino brand.

What’s up in the air right now is the implications the move will have on Perodua.