UMW Holdings Bhd has proposed a renounceable rights issue to raise up to RM1.10bil.
KUALA LUMPUR: UMW Holdings Bhd
is upbeat on the proposed acquisitions of MBM Resources and Perodua, as this would immediately raise the group’s earnings, says CIMB Equities Research.
During a briefing for analysts and fund managers, the research house said UMW highlighted four key benefits from the proposed acquisitions of MBM and Perodua.
Firstly, UMW’s strategic stake in Perodua would increase from 38% to 70.6%.
“We understand that UMW plans to consolidate its stakes in MBM and Perodua post-deal completion, but it needs the approval of the respective companies’ principals to proceed with the deal,” it said.
Secondly, UMW’s exposure in the commercial vehicle segment would increase via MBM’s multi-brand dealerships (Daihatsu, Hino).
Thirdly, the company also expects the acquisition to widen UMW’s offerings in the manufacturing segment by integrating MBM’s auto parts-manufacturing business for components like wheels and safety products, as well as noise, vibration and harshness products. For example, UMW see the potential for these auto component makers to become its vendors.
Finally, UMW believes the combined entity will have better prospects in the automotive industry, leveraging on Perodua’s strength in the national car segment and UMW’s position in the non-national car segment through Toyota.
“Furthermore, we understand that UMW is exploring the possibility of selling non-core dealership marquees that may compete with its existing Japanese principals, Toyota and Daihatsu,” it said.
To recap, CIMB Research said UMW also said that it does not intend to raise its current offer price for MBM Resources, which is already at a 13.3% premium over the five-day volume weighted average price (VWAP).
“We keep our forecasts pending MBM’s acceptance of UMW’s offer, resulting mandatory general offer (MGO) and UMW’s shareholders’ approval,” it said.
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