Sime Darby Bhd has signed a deal to buy Permodalan Nasional Bhd’s (PNB) 61.2% stake in UMW Holdings Bhd for RM3.57 billion in cash, or RM5 per share. Once the deal is confirmed, Sime Darby plans to make a general offer for the remaining 38.8% stake to delist UMW from the stock exchange. This move will strengthen Sime Darby’s position as a major player in Malaysia’s automotive sector, including the addition of Toyota and Perodua brands to its portfolio.

Sime Darby’s CEO, Datuk Jeffri Salim Davidson, highlighted the positive impact of the acquisition on earnings per share and shareholder returns. The acquisition is expected to be completed within three months, subject to regulatory and shareholder approvals.

As a result of the acquisition, Sime Darby will own a 38% stake in Perodua and a 51% equity interest in UMW Toyota Motor Sdn Bhd. PNB, the state investment firm, will still hold a 10% stake in the national carmaker and is the largest shareholder in Sime Darby with a 41.56% stake.

PNB stated that the merger is aimed at strengthening its presence in the automotive sector locally and regionally. The move aligns with the Government’s New Industrial Master Plan 2030, which aims to position Malaysia as a regional automotive hub and boost the electrification agenda.

Sime Darby’s financial results for Q4 2023 showed a significant increase in net profit to RM622 million from RM278 million in the same period of 2022. Earnings per share also rose from 4.1 sen to 9.1 sen, while revenue increased from RM10.85 billion to RM13.29 billion. For the entire fiscal year, net profit reached RM1.46 billion, up from RM1.1 billion, and revenue grew from RM42.5 billion to RM48.29 billion.

The company’s positive performance was attributed to strong results in its Australasia operations, robust performance in the Malaysian Motors business, and gains from property sales in Hong Kong. Trading in Sime Darby’s and UMW’s securities and warrants was suspended by Bursa Securities on August 24, 2023, at the request of the companies.