KUALA LUMPUR: A long time partner of UMW Holdings Bhd, Toyota Industries Corporation (TICO), has today signed a share sale agreement with UMW Equipment Division Sdn Bhd (UED) to take up a 26 per cent stake in the industrial equipment business, for RM260 million.
TICO is a manufacturer oftextile machinery, material handling equipment, automobiles and automobile parts.
Under the plan, UMW Holdings will park all its six industrial equipment businesses that operate across Malaysia, Singapore, Vietnam and China under special purpose vehicle, UMW Toyota Material Handling Sdn Bhd (UTMH).
UTMH was incorporated on July 13, 2023 and is wholly owned by UED.
Upon completion of the exercise, UED will then sell a 26 per cent interest in UTMH to TICO for RM260 million.
Upon completion of the share sale agreement, UED will have a majority shareholding of 74 per cent while TICO will have a 26 per cent interest in UTMH.
With the completion of the exercise UTMH plans to develop a one stop centre capability for the industrial equipment and logistics automation businesses, an area which is essential to capitalise on the next growth area for industrial equipment, Industry 4.0.
UMW Holdings expects to book a gain of RM85.5 million from the share sale but the final amount is contingent upon the actual net assets position of UTMH, once it includes the six industrial equipment companies, as of the closing date in the fourth quarter of 2023.
The proceeds from the deal will be used for working capital requirements, future investment opportunities, capital expenditure and/or the repayment of borrowings of UED and UMW Holdings.
UMW Holdings' business relationship with TICO started in 1967 when it was awarded the distributorship for Toyota forklift Malaysia and Singapore. Later, it was extended to include Vietnam and the Shanghai and Zhejiang regions in China.
Industrial equipment and automotive giant Sime Darby Bhd is in the process of puchasing a 61.15 per cent interest in UMW Holdings for RM3.57 billion.