Sime Darby Bhd (SIME) has proposed to acquire 61.18% stake of UMW Holdings (UMW) from Pemodelan Nasional Bhd (PNB) and Amanahraya Trustees Berhad (ART) for RM3,574m or RM5.00 per share cash.
In accordance with the Malaysian Code on Take-overs and Mergers, SIME will undertake a mandatory general offer (MGO) for the
remaining shares it does not own in UMW Holdings Berhad from minority shareholders at RM5.00 per share in cash as well, valuing the
whole deal at RM5,841.5m.
“SIME does not intend to maintain the listing status of UMW. The proposed acquisition and MGO is expected to be completed by 4QCY23 and 1QCY24, respectively. We believe the MGO price of RM5.00 per share is a good exit price for minority shareholders,” said Kenanga Research (Kenanga) in the recent Company Update Report.
This deal offers shareholders a chance to exit UMW as the major shift towards electric vehicle (EV) space could spark a price war which could affect its margin in the longer term, taking note from the current challenging operating environment in China.
“Furthermore, UMW Toyota and Perodua do not have affordable EV offerings to challenge the influx of China EV cars as well as the EV leader, Tesla. Hence, we recommend shareholders to take up the offer,” said the research house.
Kenanga modifies their call to Accept Offer with a Target Price of RM5.00.
