Sime Darby to acquire 61.2% stake in UMW in RM3.57bil deal

KUALA LUMPUR: Sime Darby Bhd has entered into a conditional share purchase agreement to acquire Permodalan Nasional Bhd's (PNB) entire 61.2% stake in UMW Holdings Bhd for RM3.57bil cash or RM5 per share.

Once the agreement becomes unconditional, the group said it will undertake a general offer for the remaining 38.8% stake it does not hold with the aim of delisting UMW from Bursa Malaysia.

According to Sime Darby group CEO Datuk Jeffri Salim Davidson, the deal, which will bring the Toyota and Perodua brands into its portfolio, will cement the group's position as Malaysia's leading automotive player.

"As a partner of choice to some of the most admired brands in the automotive sector, we are very excited to have the opportunity to work with Toyota, one of the world’s largest and most respected automakers," he said in a statement.

He added that the acquisition is accretive to Sime Darby’s earnings per share and will enhance Sime Darby’s shareholders return.

Sime Darby expects the acquisition of PNB’s stake to be completed within three months from the date of sales and purchase agreement subject to regulatory and shareholders’ approvals and customary closing conditions.

With the purchase of UMW, Sime Darby gains a 38% stake in Perodua and 51% equity interest in UMW Toyota Motor Sdn Bhd.

State investment firm PNB continues to hold a 10% stake in the national marquee via PNB Equity Resources Corp Sdn Bhd (PERC). It is also the largest shareholder in Sime Darby with a 41.56% stake.

Meanwhile, PNB confirmed separately that the consolidation of the two leaders in the automotive industry is driven by opportunities to strengthen its local and regional presence in the automotive sector.

It added that the merger will also provide a boost to the electrification agenda, which is expected to drive investment growth, enhance efficiency, and create value for unit holders.

"This strategic move is also in alignment with the Government's New Industrial Master Plan 2030, which will support the automotive sector’s further growth especially in positioning the country as the automotive hub for the region," it said in a statement.

In another statement announcing its financial results for the fourth quarter of FY23, Sime Darby posted a net profit of RM622mil during the quarter, which was a leap from RM278mil in the same quarter in 2022.

The group's earnings per share rose to 9.1 sen from 4.1 sen.

Revenue, meanwhile, jumped to RM13.29bil from RM10.85bil in the comparative quarter.

For the entire financial year, Sime Darby's net profit came to RM1.46bil, up from RM1.1bil, while revenue rose to RM48.29bil from RM42.5bil.

The board of directors declared a second interim dividend of 10 sen per share, which brings the total dividend payout for the year to 13 sen per share, or RM886mil, representing a 61% net profit payout.

On the positive performance, the group said it was owing to the improved results from the industrial division's Australasia operations, strong performance from the Motors business in Malaysia and a gain on the disposal of properties in Hong Kong.

“Our strong performance is a testament to our resilience, driven by our strategy amidst a challenging market environment.

"Despite the headwinds that we have been experiencing in China, our other markets have performed well,” said Jeffri Salim.

During the lunch break, Bursa Securities suspended trading in Sime Darby's and UMW's securities and warrants at the request of the respective companies with effect from 2.30pm on Aug 24, 2023 (Thursday).

The trading stock of Sime Darby was last traded one sen higher at RM2.11 a share on the back of 4.85 million units crossed while UMW's shares had risen seven sen to RM4.62 on 4.1 million shares done.