UMW goes back to drawing board

PETALING JAYA: UMW Corp Bhd’s plan to increase its shareholding in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) has gone back to the drawing board.
 
Sources said UMW is looking at how to improve its offer to Med-Bumikar Mara Sdn Bhd, the controlling shareholder of MBM Resources Bhd that has a 20% direct stake and 2.55% indirect interest in Perodua.
 
The indirect interest is held through Daihatsu (Malaysia) Sdn Bhd, which holds a direct 5% stake in Perodua.
 
It is learnt that the option to increase the price for MBM was something not on the table.
 
“UMW is already calling on a rights issue to raise up to RM1.1bil to finance the takeover of MBM Resources. Increasing the price is not something that the board would consider,” said a source.
 
An option could be for UMW to modify the proposal to make an offer for MBM’s 20% stake in Perodua instead of the whole listed company. This would come up to RM835mil, which would be sufficient from the proceeds of the rights issue.
 
“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,” said a source.
 
In return, MBM would be holding an indirect 5% interest in Perodua through Daihatsu (Malaysia).
 
Based on the proposed rights issue, UMW is offering MBM shareholders cash of RM2.56 or an option to accept UMW shares. The share swap option is at the ratio of 21 UMW shares for every 50 MBM shares.
 
“UMW could sweeten the share swap option to entice MBM shareholders,” said a source.
 
Med-Bumikar Mara, which holds just above 50% in MBM has rejected UMW’s offer of RM2.56 per share, which values the company at about RM1bil. However MBM’s 20% stake in Perodua itself is worth RM835mil.
 
In addition to the direct interest, MBM holds 51.5% stake in Daihatsu (Malaysia) Sdn Bhd, which in turn has a direct 5% stake in Perodua.
 
MBM’s direct and indirect interest in Perodua, which is the dominant automotive group in the country with a lion's share of the market, comes to nearly RM1bil.
 
Apart from its interest in Perodua, MBM has the dealership of several marques such as Volvo and Mitsubishi, assembly and distribution of Hino trucks and manufacturing of auto parts through Hirotako Holdings Bhd. MBM is also the owner of some properties.