The proposed takeover of MBM could still face other challenges related to other stakeholders

By RAHIMI YUNUS / Pic By TMR

UMW Holdings Bhd’s proposed takeover of MBM Resources Bhd is turning to be far from a tawdry local drama, despite speculations that the latter’s major shareholder Med-Bumikar Mara Sdn Bhd will accept the offer.

The Kuala Lumpur High Court’s decision to dismiss the injunction application to stop Med-Bumikar’s EGM, expected on Monday, to vote on the UMW proposal has cleared one of the obstacles.

But the completion of the deal is far from definite, said an industry source.

The proposed takeover of MBM could still face other challenges related to other stakeholders and vested parties.

“There are many other conditional items and precedents that must be done before the deal is complete, should the offer be accepted. Other stakeholders such as Daihatsu Motor Co Ltd and Mitsui & Co Ltd will also have their input,” the source told The Malaysian Reserve.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua), the jewel of the proposed corporate takeover, was established in 1993 as a joint-venture company between Malaysian and Japanese partners.

Perodua’s shareholders are UMW (38%), MBM (20%), PNB Equity Resource Corp Sdn Bhd (PERC) (10%), Daihatsu Motor (20%), Daihatsu (M) Sdn Bhd (5%), Mitsui Group (4.2%) and Mitsui & Co (Asia Pacific) Pte Ltd (2.8%).

Besides the MBM takeover bid, which will give UMW an additional 20% stake in Perodua, the government-linked companies under Permodalan Nasional Bhd (PNB) have offered to acquire PERC’s 10% stake for RM417.5 million.

MBM currently holds dealerships for the Perodua, Mitsubishi, Volkswagen, Volvo, Daihatsu and Hino brands. MBM and PERC’s acquisition in Perodua will raise UMW’s stake in Perodua to 70.6%, cementing its dominance in Malaysia’s auto sector, both in passenger and commercial segments.

It is not known how Japanese principal Daihatsu stands on the acquisition.

MBM’s shareholders have highlighted its objection for UMW to engage the key principals, according to a Bursa Malaysia filing.

UMW’s deal and the resistance from MBM’s shareholders signalled a rising tension between the two parties, and the turning point could lie with the other stakeholders in Perodua.

“Other shareholders play a role too. They will have to have a say,” said the source.

Perodua employees’ unions had voiced their objection over the takeover bid. Kesatuan Pekerja-Pekerja Perodua and Kesatuan Pekerja-Pekerja Perodua Engine Manufacturing Sdn Bhd were against the proposed acquisition, citing concern that it would affect their rights and interests and jeopardise Daihatsu’s involvement as a technology partner.

The source said it seems that there are two camps in Med-Bumikar, but the final decisions can only be known after the company’s EGM on April 30, which is also the deadline of UMW’s offer.

News reports suggest that Majlis Amanah Rakyat (Mara), the largest and only institutional shareholder in Med-Bumikar with a 29% stake, is in favour of the MBM takeover by UMW. Two other founding families in Med-Bumikar are also said to be in support of the proposed acquisition.

UMW on March 9 made an offer to Med-Bumikar and Central Shore Sdn Bhd (CSSB) to acquire their 50.07% com- bined stake in MBM for RM501 million, or RM2.56 per share, which valued the entire MBM at about RM1 billion.

The price was, however, at a 30% discount of MBM’s net tangible asset per share at RM3.68.

MBM on March 26 said in a Bursa Malaysia filing that Med-Bumikar and CSSB both rejected the offer, claiming the offer price was unreasonable.