UMW sticks to its offer price for MBM

By RAHIMI YUNUS / Graphic By TMR

UMW Holdings Bhd has not received any engagement from Med-Bumikar Mara Sdn Bhd’s task force committee, which was backed by Majlis Amanah Rakyat (Mara), to discuss the proposed takeover of MBM Resources Bhd.

The task force committee which was endorsed at the company’s EGM on April 30, 2018, shall comprise of at least two members from Mara and has been tasked to negotiate with UMW for a better price.

Mara is the largest and only institutional shareholder in Med-Bumikar with a 29% interest.

Six other founding families with shareholdings, control not more than 15% each.

“We have heard about the task force, but they have not engaged us. We are still waiting for their response,” UMW’s president and group CEO Badrul Feisal Abdul Rahim said after the company’s AGM in Shah Alam yesterday.

Badrul Feisal said UMW is sticking to the offer price, but is open for any changes accordingly.

“We believe in what we want to do next, but it depends on our engagement with other parties. We will stick to our position until such a time that we may take different steps,” he added.

To recap, the offer price was RM2.56 sen a share, which was at a 30% discount of MBM’s net tangible asset per share value of RM3.68.

UMW’s proposed takeover of MBM via Med-Bumikar’s 50.07% stake in the latter could face legal obstacles related to other stakeholders and vested parties surrounding Perusahaan Otomobil Kedua Sdn Bhd (Perodua), the ultimate trophy of the deal.

A source told The Malaysian Reserve previously that Med-Bumikar could find itself breaching its legal undertaking with venture partners in Perodua, particularly the carmaker’s Japanese principal Daihatsu Motor Co Ltd, if it accepts the offer tabled by UMW.

Badrul Feisal said UMW, which currently holds 38% of Perodua, is committed to meet the requirements of the other parties.

“We have always been consistent and ready to engage all stakeholders to make sure all covenants and requirements to be met can be met,” he said.

UMW has extended its offer period for the proposed acquisition to Oct 31, 2018, to allow for any further deliberation.

On overall business, Badrul Feisal believes the worst is over and the company is now strengthening its market position in the core segments namely automotive, equipment, and manufacturing and engineering (M&E), after the exit from the listed oil and gas segment.

UMW has allocated RM600 million for capital expenditure this year with RM200 million each for the automotive and equipment division, RM100 million for M&E and another RM100 million for land development.

On the automotive division, which currently contributes around 80% of the company’s top line, it will see a rollout of new completely knocked down Toyota vehicles following the commissioning of UMW’s second assembly plant in Bukit Raja, Klang, early next year.

For M&E, Badrul Feisal said UMW is at the early stages of discussion with other aero parts and engine makers such as Safran SA and Pratt & Whitney.

It is currently producing fan cases for Rolls-Royce plc. UMW’s net profit rose to RM74.08 million in the first quarter ended March 31 this year (1Q18), versus the RM20.16 million recorded in 1Q17, underpinned by the improved performance of the automotive unit.