Malaysia’s Sime Darby surges on plans to buy $768 million majority stake in UMW

By Rishav Chatterjee

(Reuters) – Shares in Malaysian conglomerate Sime Darby opened about 5% higher on Friday, a day after it disclosed plans to buy a majority stake in local industrial group UMW Holdings for 3.57 billion ringgit ($768.24 million).

The 61.2% stake in UMW is being sold by the country’s top asset manager Permodalan Nasional Bhd (PNB), the biggest shareholder in both Sime Darby and UMW.

Shares of Sime Darby rose as much as 5.2% to 2.22 ringgit as of 0108 GMT. UMW shares gained about 5%.

Sime Darby also said in a statement late Thursday it would make an offer for the remaining 38.8% stake in UMW to delist it from the Bursa Malaysia stock exchange once the agreement with PNB becomes unconditional.

Under the deal, PNB plans to merge Sime Darby and UMW with the aim of creating a bigger automotive firm in a deal to further strengthen respective positions in the country’s automobile industry.

UMW is the largest shareholder in Malaysia’s second national auto maker, Perusahaan Otomobil Kedua Sdn., better known as Perodua, and assembles Toyota Motor’s vehicles in the country.

Thursday’s announcement came after Reuters first reported that state-owned PNB was considering merging Sime Darby Motors and Perusahaan Otomobil Kedua (Perodua), a unit of UMW, to create a local auto giant.

“Of utmost significance, the management has indicated that this acquisition is vital for enabling access to the mass market, especially considering that Perodua and Toyota collectively possess about 52% of the market share,” Jefferies analysts said.

Sime Darby, through its auto unit, Sime Darby Motors sells luxury cars in the country and is currently also looking to sell its Asia-focussed healthcare joint venture with Australia’s Ramsay Health Care.

($1 = 4.6470 ringgit)

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Rashmi Aich)