KUALA LUMPUR: MBM Resources Bhd has proposed to take over Hirotako Holdings Bhd to expand its automotive manufacturing division, at a cost of RM412.5 million.
MBM which has stakes in Perusahaan Otomobil Nasional Kedua Sdn Bhd (Perodua) and Daihatsu (M) Sdn Bhd among others, had offered 97 sen per Hirotaka share and five sen per Hirotako warrant.
The offer was at a premium of nine sen or 10.23% above Hirotako’s pre-suspension price of 88 sen on Oct 25.
Hirotako is principally involved in the manufacture and sale of automative components which includes airbag modules, seat belts, steering wheels, noise and heat reduction materials as well as insulator parts.
According to an MBM statement to Bursa Malaysia yesterday, the company had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd to accept the offer in respect of its entire holding of 99,871,112 shares, representing 23.8% of the total voting shares in Hirotako.
Assuming full acceptance of all offer securities, the acquisition would cost MBM approximately RM412.5 million. MBM is expected to fund the acquisition through internally generated funds and borrowings, and has obtained sufficient credit facilities.
Explaining its rationale for the acquisition, MBM said it is continually looking for opportunities to expand its automotive manufacturing division. “The proposed offer is in line with the company’s business expansion plan and is undertaken with the objective to enable MBM to expand its automotive manufacturing division.
“The proposed offer is also expected to enable the company to fast track its business expansion by acquiring an existing matured business rather than via organic growth,” said MBM, adding that Hirotako’s group business will complement its existing automotive manufacturing division and subsidiaries.
It is also expected to enable the sharing of common resources between the MBM group and Hirotako group to have better co-ordination of business planning and resources deployment, MBM added.
“As a result, it may give rise to potential operational cost efficiency and cost savings. This in turn is expected to contribute positively to MBM’s financial performance in the future,” said the statement.
MBM also owns Precision Press Industries Sdn Bhd which manufactures precision metal stamped parts and components and the design and fabrication of tool and die for the metal stamping industry. Its other company is Tekun Asas Sdn Bhd which manufactures loud speaker grilles and hard board panelling.
An analyst said Hirotako is a well managed company that would provide integration synergy for MBM.
For the financial year ended Dec 31, 2010, Hirotako posted a net profit of RM36.4 million and had net assets of RM195.1 million. At RM412.5 million, he noted that MBM would be paying 2.1 times book and a trailing price-to-earnings ratio of 11.3 times, which he thinks is fair, although not particularly cheap.
MBM shares closed three sen higher at RM3.10 yesterday. Hirotako shares were suspended yesterday and will resume trading today.
They were last traded at 88 sen on Tuesday and have gained 57% since hitting a 12-month low of 56 sen on Sept 26.
This article appeared in The Edge Financial Daily, October 28, 2011.
MBM which has stakes in Perusahaan Otomobil Nasional Kedua Sdn Bhd (Perodua) and Daihatsu (M) Sdn Bhd among others, had offered 97 sen per Hirotaka share and five sen per Hirotako warrant.
The offer was at a premium of nine sen or 10.23% above Hirotako’s pre-suspension price of 88 sen on Oct 25.
Hirotako is principally involved in the manufacture and sale of automative components which includes airbag modules, seat belts, steering wheels, noise and heat reduction materials as well as insulator parts.
According to an MBM statement to Bursa Malaysia yesterday, the company had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd to accept the offer in respect of its entire holding of 99,871,112 shares, representing 23.8% of the total voting shares in Hirotako.
Assuming full acceptance of all offer securities, the acquisition would cost MBM approximately RM412.5 million. MBM is expected to fund the acquisition through internally generated funds and borrowings, and has obtained sufficient credit facilities.
MBM Resources says Hirotako's business will complement its existing auto manufacturing division and subsidiaries.
Explaining its rationale for the acquisition, MBM said it is continually looking for opportunities to expand its automotive manufacturing division. “The proposed offer is in line with the company’s business expansion plan and is undertaken with the objective to enable MBM to expand its automotive manufacturing division.
“The proposed offer is also expected to enable the company to fast track its business expansion by acquiring an existing matured business rather than via organic growth,” said MBM, adding that Hirotako’s group business will complement its existing automotive manufacturing division and subsidiaries.
It is also expected to enable the sharing of common resources between the MBM group and Hirotako group to have better co-ordination of business planning and resources deployment, MBM added.
“As a result, it may give rise to potential operational cost efficiency and cost savings. This in turn is expected to contribute positively to MBM’s financial performance in the future,” said the statement.
MBM also owns Precision Press Industries Sdn Bhd which manufactures precision metal stamped parts and components and the design and fabrication of tool and die for the metal stamping industry. Its other company is Tekun Asas Sdn Bhd which manufactures loud speaker grilles and hard board panelling.
An analyst said Hirotako is a well managed company that would provide integration synergy for MBM.
For the financial year ended Dec 31, 2010, Hirotako posted a net profit of RM36.4 million and had net assets of RM195.1 million. At RM412.5 million, he noted that MBM would be paying 2.1 times book and a trailing price-to-earnings ratio of 11.3 times, which he thinks is fair, although not particularly cheap.
MBM shares closed three sen higher at RM3.10 yesterday. Hirotako shares were suspended yesterday and will resume trading today.
They were last traded at 88 sen on Tuesday and have gained 57% since hitting a 12-month low of 56 sen on Sept 26.
This article appeared in The Edge Financial Daily, October 28, 2011.
