KUALA LUMPUR, August 24 – Sime Darby Berhad has taken a significant step toward becoming Malaysia’s leading automotive player with its latest move. The company has entered into a conditional share purchase agreement with Permodalan Nasional Berhad (PNB) to acquire PNB’s 61.2% stake in UMW Holdings Berhad (UMW), a well-established conglomerate with diverse businesses, including automotive, equipment, aerospace, and manufacturing & engineering (M&E) segments.
The deal, valued at RM3.57 billion or RM5.00 per share in cash, will see Sime Darby purchase PNB’s stake and subsequently make a general offer for the remaining 38.8% stake to delist UMW from Bursa Malaysia once the agreement becomes unconditional. Dato’ Jeffri Salim Davidson, Sime Darby Berhad’s Group Chief Executive Officer, expressed enthusiasm about the acquisition, stating, “This is a strategic move to further scale up and strengthen our presence in the Malaysian automotive sector, adding two highly performing brands into our Malaysian portfolio – Toyota and Perodua.
The deal will cement Sime Darby’s position as Malaysia’s leading automotive player.” This acquisition not only strengthens Sime Darby’s position in the automotive sector but is also expected to be accretive to its earnings per share while enhancing shareholder returns. The completion of PNB’s stake acquisition is expected within three months, subject to regulatory and shareholder approvals and customary closing conditions. The move into the automotive sector represents a significant expansion of Sime Darby’s portfolio, with multiple strategic advantages:
1. Strengthened Presence in Malaysia: The acquisition positions Sime Darby as a leading automotive player in Malaysia, boasting over 50% market share. This substantial foothold provides opportunities for revenue growth and operational efficiencies.
2. Diversified Geographical and Business Portfolio: With expanded contributions from Malaysia, Sime Darby’s automotive business will have a more balanced revenue mix from Malaysia, China, and Australia. This diversification ensures greater resilience against changing market dynamics.
3. Entry into a New Brand Ecosystem: The acquisition grants Sime Darby access to Toyota’s extensive ecosystem, offering collaboration, synergies, and potential growth. It also provides a substantial stake in Perodua, strengthening the competitive position and profitability.
4. Strengthening Other Automotive Segments: The acquisition brings manufacturing and distribution capabilities that complement Sime Darby’s existing assembly and retail businesses, enhancing its presence across the automotive value chain.
5. Expansion into Material Handling Business: The deal includes TICO, a leading player in the forklifts market. This addition diversifies Sime Darby’s industrial segment portfolio, capitalizing on the growing demand for material handling equipment.
In summary, Sime Darby’s acquisition of UMW’s stake represents a significant strategic move, poised to solidify its position as Malaysia’s foremost automotive player and expand its presence in related sectors, ensuring long-term resilience and profitability.