UMW’s Perodua ‘dream’: Will Mara protect Bumiputera interests?

Perodua has dominated the automotive market, with a market share of 40% as of January 2018.

PETALING JAYA: Mara will have a big say in any offer that UMW Holdings makes to buy a company with a 22.5% stake in Perodua.

This is because Mara needs to balance its business decisions with its social obligations.

The company with the valuable Perodua link is MBMR, a subsidiary of Med-Bumikar Mara Sdn Bhd (MBMSB), in which Mara has a 30% stake.

A source with knowledge on the planned acquisition, told FMT that as such, it won’t be easy for UMW to buy MBMR.

Besides Mara, six founding families each roughly hold an 11.6% stake in MBMSB.

Earlier this month, UMW, which owns 38% of Perodua, made an offer of RM2.56 per share for MBMR, bringing the total value of the deal to an estimated RM1.1 billion.

However, some analysts have pointed out that this offer is undervalued.

“The first hurdle is the low offer price for MBMR shares. Everyone knows this is too low.

“You cannot undervalue their shares and expect them to be agreeable to the deal. They must be stupid to agree,” said the source.

The source said that if UMW offered an attractive price for MBMR and Mara, and the minority shareholders agreed, then the deal would be “plain sailing”.

“But in the case of MBMSB, it’s not so straightforward, because two of the six founding families are Bumiputeras. The remaining four families are non-Bumiputeras.

“So if one or both of the Bumiputera families object to the sale of MBMR to UMW, then Mara will be in a tough spot to sell the shares.”

The source explained that this was because Mara would have to get the support of the non-Bumiputera MBMSB shareholders if it wanted to “force through” the deal.

“But this would mean acting against Bumiputera interests.”

In any case, the source said he couldn’t see why Mara would want to sell MBMR, which has been paying decent dividends, and especially because of its 22.5% stake in Perodua.

“It doesn’t take a genius to see that the 22.5% stake in Perodua is going to be worth way more than the price being offered by UMW.

“Perodua’s market share is increasing every year and it is backed by Daihatsu, which in turn is owned by Toyota. MBMR is sitting on a gold mine.”

Perodua, Malaysia’s second national carmaker, has come a long way since it introduced the tiny Kancil in 1994, in a market then dominated by Proton.

In terms of sales, Perodua lagged behind Proton until 2006, a year after the game-changing Myvi entered the market.

Since then, Perodua has dominated the automotive market, with a market share of 40% as of January 2018.

This year, it aims to sell 209,000 vehicles, buoyed by the popularity of the new Myvi, which has already recorded 48,000 bookings to date.

Previously, in an interview with FMT, Azmi Abd Rahim, a minority shareholder in MBMSB, said he agreed with most analysts that UMW had undervalued MBMR’s shares.

He said the offer of RM2.56 per share was way below MBMR’s net tangible assets of RM3.68 per share.