Will UMW get control of Perodua?

RM1b proposed takeover likely to fail as offer period nearing its Oct 31 deadline


Is it on or off? UMW Holdings Bhd’s proposed RM1 billion takeover of MBM Resources Bhd has made no traction, suggesting the bid might fizzle out as the new leadership at the shareholders level for both groups may have a different course to take.

The offer period is already nearing its Oct 31 deadline and with two working days left, industry observers are sceptical the deal will materialise as no new developments were announced to signal any progress.

“We have not heard anything. There should have been board meetings at the company level if the deal is to be concluded,” a shareholder told The Malaysian Reserve (TMR).

UMW was mum on the progress of the corporate exercise.

“We are unable to comment on this matter at present as the offer is still valid until Oct 31, 2018.

“We will keep you posted on any new development,” a UMW official noted in an email reply.

An industry source told TMR the proposed acquisition may fall through due to existing resistance from certain MBM shareholders and the change of leadership at Permodalan Nasional Bhd (PNB) and Majlis Amanah Rakyat (Mara).

Tan Sri Dr Zeti Akhtar Aziz, the former Bank Negara Malaysia governor, was appointed as the chairman of the country’s largest fund manager and controlling shareholder of UMW in late June after the exit of Tan Sri Abdul Wahid Omar.

“It is unlikely that both (Zeti and Abdul Wahid) have the same business strategy,” the source said.

A market analyst told TMR that PNB’s new leadership may want to cut direct equity ownership in its companies in line with the new government’s agenda to reduce the crowding-out effect by public investment firms and unleash the full potential of the private sector. Mara also saw a change in leadership.

The government appointed Dr Hasnita Hashim, an experienced investment banker with a PhD in nuclear physics, as its new chairman last month.

The Prime Minister’s Office also announced the appointment of Mara Council members, comprising people from diverse portfolios such as insurance, automotive and oil and gas. The appointees are former CEO of Proton Holdings Bhd Tengku Mahaleel Tengku Ariff; Malaysian Aviation Commission chairman and MD of Prokhas Sdn Bhd Dr Nungsari Ahmad Radhi; Allianz Malaysia Bhd CEO Zakri Khir; Mydin Mohamed Holdings Bhd MD Datuk Ameer Ali Mydin; academician Professor Tan Sri Dzulkifli Abdul Razak and Mayban Life Assurance Bhd chairman Datuk Syed Tamim Ansari Syed Mohamed.

An official from Mara noted that the decision on the offer tabled will be left to the board at MBM.

As of Sept 28, 2018, PNB is the controlling shareholder of UMW with a 58.42% stake, followed by the Employees Provident Fund Board (EPF) with 10.57% and Retirement Fund Inc with 6.36%.

UMW is also acquiring PNB Equity Resource Corp Sdn Bhd’s (PERC) 10% stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) for RM417.5 million. PERC is wholly owned by PNB.

To recap, UMW made an offer to Med-Bumikar Mara Sdn Bhd and Central Shore Sdn Bhd in March to buy their 50.07% combined stake in MBM for RM501 million or RM2.56 per share. MBM, in turn, holds a 22.5% stake in Perodua. MBM’s other major shareholder is the EPF with a 15% stake.

A deal with MBM and PERC will raise UMW’s stake in Perodua from the current 38% to 70.6%, and thus give it a tighter grip on the country’s No 1 carmaker in terms of market share.

Perodua’s principal, Daihatsu Motor Co Ltd, has communicated its views over the proposed takeover of MBM and control of Perodua to the government. Earlier reports suggested the Japanese automaker was not in favour of the acquisition, citing preference for the status quo to remain with no single controlling shareholder in Perodua.

It is not known whether the proposed takeover would lead to Daihatsu’s exit as Perodua’s technology partner.

The minority shareholder of Perodua, Mitsui & Co Ltd, was tight-lipped when contacted by TMR in May.

Perodua’s shareholders now are UMW with a 38% stake, MBM (20%), PERC (10%), Daihatsu (20%), Daihatsu (M) Sdn Bhd (5%), Mitsui Group (4.2%) and Mitsui & Co (Asia Pacific) Pte Ltd (2.8%).

The proposed offer comes amid Putrajaya’s plan to develop a third national car, which has attracted 21 bids from local and foreign companies including joint ventures.