Toyota, Hino, Daihatsu, And Perodua To Consolidate Under UMW Holdings?

Last week, UMW Holdings made an offer to acquire MBM Resources (MBMR) from their present controlling shareholders Med-Bumikar Mara SB and Central Shore SB for approximately RM501 million in cash.

Med-Bumikar Mara SB and Central Shore SB control 50.07 percent of MBMR, which in turn holds a 22.58 percent stake in Perodua. If the offer is accepted, and when combined with UMW’s separate offer to purchase the government-owned PNB Equity Resource Corporation Sdn. Bhd.’s 10 percent stake in Perodua for RM117.5 million in cash, UMW Holdings will control 70.58 percent of Perodua.

It is important to note that to date, MBMR has yet to come to a decision regarding UMW’s offer but analysts at RHB Research say that the offer by UMW is too low and shareholders of MBMR are expected to hold out. Accepting the offer by UMW would also trigger a mandatory general offer (MGO) for the remaining shares at MBMR.

UMW’s offer for PNB’s stake in Perodua however, is likely to proceed since PNB is also a major shareholder of UMW Holdings.

As Malaysia’s best-selling automotive brand, the focus of UMW’s deal was very much centered around Perodua.

However apart from its interest in Perodua, MBMR also owns 51.5 percent of commercial vehicles distributor Daihatsu (Malaysia) Sdn. Bhd. (DMSB) and 42 percent of Hino Motors Sales (Malaysia) Sdn. Bhd. (HMSM), plus 42 percent of lorry assembler Hino Motors Manufacturing (Malaysia) Sdn. Bhd. (HMMM).

Both Daihatsu and Hino brands are part of the Toyota Motor group, with Perodua being an extension of Toyota’s universe by virtue of Perodua’s partnership with Daihatsu Motor Co., Ltd. If successful, it would also imply that UMW Holdings will consolidate all Toyota-owned brands’ local operations under its umbrella.

Presently, UMW’s presence in the commercial vehicles segment is limited only to the Hiace van and Hilux pick-up truck, so the addition of Daihatsu and Hino products will be a good complement. UMW is also the distributor for Penzoil lubricants, including lubricants for heavy duty commercial vehicles.

Last year, Daihatsu sold only 803 vehicles, contributed solely by the Gran Max range. Hino however, is the second best-selling commercial vehicle brand in Malaysia, ranked behind the DRB-owned Isuzu Malaysia. Last year, Hino sold 5,002 vehicles versus Isuzu’s 5,650 units (excluding D-Max pick-up truck and MU-X SUV).

On the retail front, MBMR also owns Federal Auto Holdings Berhad, the largest dealer for Volvo cars in the country, as well as F.A. Wagen, a prominent dealer for Volkswagen. Both compete against UMW Holdings’ Toyota and Lexus operations so the deal will have an indirect effect to both Volvo Car Malaysia and Volkswagen Passenger Cars Malaysia.

The offer by UMW will remain open until 5pm 28 March 2018.