PETALING JAYA: Conglomerate Sime Darby Bhd plans to divest its hospital business and 3,237ha of land in Labu, Negeri Sembilan, to reduce its borrowings.
Group CEO Jeffri Salim Davidson said several potential buyers have shown interest in acquiring its 50:50 joint venture (JV) Ramsay Sime Darby Health Care Sdn Bhd.
“I think there has been a significant level of interest from quite a number of players,” he said, adding that talks are ongoing and he expects the divestment to be completed by first quarter of next year.
The confirmation that Sime Darby aims to divest its non-core businesses to reduce its borrowings comes on the heels of its proposed acquisition of a 61.2% stake in UMW Holdings Bhd from its parent company, Permodalan Nasional Bhd (PNB), for RM3.57 billion today.
The exercise, one of the largest merger and acquisition deals in Malaysia, is expected to transform Sime Darby into the country’s leading automotive player with the addition of Toyota and Perodua, capturing up to 60% of domestic automotive total industry volume.
The group expects to complete the takeover of UMW by end-February 2024.
“Sime Darby has previously divested some of its non-core businesses. The hospital is non-core, which is why it’s a part of the divestment,” Jeffri said at Sime Darby’s fourth quarter results briefing today.
The joint venture with Australian partner Ramsay Health Care Ltd encompasses seven hospitals in Malaysia and Indonesia, with a total of 1,500 licensed beds.
On June 28, Sime Darby said it had reached a decision with its Ramsay Health Care to explore the possibility of a sale of the JV. Reuters had reported that the divestment deal could value the business at some RM6 billion.
Sime Darby group chief financial officer Mustamir Mohamad said the proceeds from the proposed divestment would be utilised to trim UMW’s debts totalling RM2.7 billion.
Sime Darby had earlier announced a net profit of RM1.46 billion for the financial year ended June 30 (FY2023), up by 32.2% from the RM1.1 billion recorded last year.
The better performance was mainly due to improved results from its industrial division as its Australasian operations delivered higher profits, and a gain on the disposal of properties in Hong Kong.
The conglomerate said its revenue increased 13.6% to RM48.3 billion in FY2023 versus RM42.5 billion in FY2022.
For the fourth quarter ended June 30 (Q4 FY2023), its net profit jumped to RM622 million from RM278 million in the same quarter last year, while revenue for the quarter rose 22.4% to RM13.3 billion, compared with RM10.9 billion in Q4 FY2022.
The group declared a second interim dividend of 10 sen per share for Q4 FY2023, payable on Sept 29.
Sime Darby’s share price closed a sen or 0.48% higher at RM2.11, giving it a market capitalisation of RM14.38 billion.