Sime Darby in $769 million deal to add Lexus to its portfolio

BLOOMBERG

Malaysian conglomerate Sime Darby Bhd said it’s buying a 61.2% stake in UMW Holdings Bhd for 3.57 billion ringgit ($769 million) to further strengthen its position in the country’s automobile industry.
Sime Darby entered into a conditional purchase agreement with the nation’s largest state-owned fund, Permodalan Nasional Bhd, to buy its shares of UMW.
The company will subsequently make the mandatory offer for the remaining 38.8% stake it doesn’t hold, with the aim of delisting UMW, it said in a statement issued.  UMW’s shares rose as much as 5.6% to their highest level since October 2019, while those of Sime Darby jumped as much as 6.6%, the most since November 24.
UMW is the largest shareholder of Malaysia’s second national carmaker, Perusahaan Otomobil Kedua Sdn, better known as Perodua, and assembles Toyota vehicles in the country. Sime Darby is a distributor of luxury cars including BMW and Rolls-Royce, and is looking to exit a healthcare venture.
“Perodua and Toyota are in manufacturing and assembly. This deal completes a whole cycle,” Sime Darby Group Chief Executive Officer Jeffri Salim Davidson said at a briefing. The group is “reallocating capital from hospital business to the core motor business,”  he said.
The deal will help Sime Darby capture more than half the total industry volume locally as well as even out revenue contribution from its main markets, namely Malaysia, China and Australia, Chief Financial Officer Mustamir Mohamad said.
The company said it expects the acquisition to be completed within three months from the date of the agreement. It’s subject to regulatory and shareholders’ approvals and customary closing conditions.