(PROPOSED MBMR ACQUISITION, PROPOSED MO AND PROPOSED PERODUA ACQUISITION ARE COLLECTIVELY REFERRED TO AS PROPOSALS )

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1 UMW HOLDINGS BERHAD ( UMWH OR COMPANY ) (I) (II) PROPOSED ACQUISITION OF ALL THE ORDINARY SHARES IN MBM RESOURCES BERHAD ( MBMR ) ( MBMR SHARES ) HELD BY MED-BUMIKAR MARA SDN BHD ( MED-BUMIKAR ) AND CENTRAL SHORE SDN BHD ( CSSB ), A WHOLLY-OWNED SUBSIDIARY OF MED-BUMIKAR, COLLECTIVELY REPRESENTING 50.07% EQUITY INTEREST IN MBMR ( PROPOSED MBMR ACQUISITION ), AND THE RESULTANT PROPOSED MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING MBMR SHARES NOT ALREADY OWNED BY UMWH AND PERSONS ACTING IN CONCERT WITH IT, IF ANY, AFTER THE PROPOSED MBMR ACQUISITION ( PROPOSED MO ); AND PROPOSED ACQUISITION OF 14,000,000 ORDINARY SHARES IN PERUSAHAAN OTOMOBIL KEDUA SDN BHD ( PERODUA ) HELD BY PNB EQUITY RESOURCE CORPORATION SDN BHD ( PERC ), REPRESENTING 10.00% EQUITY INTEREST IN PERODUA ( PROPOSED PERODUA ACQUISITION ) (PROPOSED MBMR ACQUISITION, PROPOSED MO AND PROPOSED PERODUA ACQUISITION ARE COLLECTIVELY REFERRED TO AS PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of UMWH, Maybank Investment Bank Berhad ( Maybank IB ) wishes to announce that the Company had made separate conditional offers to the following parties: Med-Bumikar and its wholly-owned subsidiary, CSSB, for the acquisition of their collective 50.07% equity interest in MBMR; and PERC for the acquisition of PERC s 10.00% equity interest in Perodua. 2. PROPOSED MBMR ACQUISITION 2.1 Background information on the Proposed MBMR Acquisition The conditional offer to Med-Bumikar and CSSB for all their 195,717,751 MBMR Shares ( MBMR Sale Shares ), collectively representing 50.07% equity interest in MBMR is at a price of approximately RM501.0 million or RM2.56 per MBMR Sale Share, valuing MBMR at approximately RM1.0 billion (based on 100% equity value), to be settled in cash ( MBMR Offer ). The MBMR Offer represents a premium of 13.3% over the 5-day volume weighted average market price ( VWAP ) of MBMR Shares up to and including 6 March 2018, being the last trading day prior to the date of the MBMR Offer, of RM2.26. In the event MBMR declares, makes or pays any dividend and/or other distributions before completion of the Proposed MBMR Acquisition, the consideration of the MBMR Offer shall be reduced by the quantum of the net dividend and/or distribution per MBMR Sale Share. If the MBMR Offer is accepted and subject to the completion of the Proposed MBMR Acquisition, UMWH s shareholding in MBMR will increase from nil to 50.07% and UMWH will then be obliged to extend the Proposed MO pursuant to Section 218(2) of the Capital Markets and Services Act, 2007 and Paragraph 4.01 of the Rules on Take-Overs, Mergers and Compulsory Acquisitions. UMWH does not intend to maintain the listing status of MBMR on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Securities ) subsequent to the Proposed MO. 1

2 2.2 Background information on MBMR MBMR was incorporated in Malaysia under the Companies Act, 1965 on 17 December 1993 as a private limited company under the name MBM Resources Sdn Bhd and is deemed registered under the Companies Act, On 16 February 1994, the company was converted to a public limited company. MBMR was listed on the then Main Board of the Kuala Lumpur Stock Exchange (now Main Market of Bursa Securities) on 9 February MBMR is principally an investment holding company. MBMR together with its subsidiaries, joint-ventures and associates is an automotive conglomerate with diverse investments in the automotive industry involving, among others, the distribution and dealership of major international and local vehicle brands in Malaysia such as Perodua, Daihatsu, Hino, Mitsubishi, Volkswagen and Volvo marques, and the manufacturing of automotive parts, namely, wheels, airbags, seatbelts, steering wheels and noise, vibration and harshness products. Its principal market is Malaysia. (Source : MBMR s announcements and Annual Report for the financial year ended 31 December 2016) 2.3 Salient terms of the MBMR Offer Offer period The MBMR Offer shall remain open for acceptance until 5.00 p.m. on 28 March 2018, after which, it shall lapse unless UMWH agrees in writing to extend the period for which the MBMR Offer shall continue to be valid. Binding agreement The acceptance of the MBMR Offer by Med-Bumikar and CSSB ( Acceptance of MBMR Offer ) will constitute a binding agreement between the parties for the Proposed MBMR Acquisition ( MBMR Agreement ) provided that there is no fact, matter or circumstances, which in the sole determination of UMWH constitute a Material Adverse Event (as defined below), an NTA Deterioration (as defined below) or a Material NTA Deterioration (as defined below), contained in the disclosure letter to be provided by Med-Bumikar and CSSB to UMWH, which would allow UMWH to withdraw the MBMR Offer. (iii) Conditions precedent The completion of the Proposed MBMR Acquisition is conditional upon the following conditions precedent being fulfilled or waived within 3 months from the date of Acceptance of MBMR Offer or such other date as may be mutually agreed between the parties ( MBMR Long Stop Date ): UMWH being satisfied with the results of the legal, accounting, financial, commercial and operational due diligence on MBMR and selected subsidiaries of MBMR (namely, Oriental Metal Industries (M) Sdn Bhd ( OMI ), Hirotako Holdings Bhd, Autoliv Hirotako Sdn Bhd, Daihatsu (M) Sdn Bhd ( DMSB ), Hino Motor Sales (M) Sdn Bhd, Hino Motors Manufacturing (M) Sdn Bhd, MBMR Properties Sdn Bhd, Federal Auto Holdings Bhd, Inai Benua Sdn Bhd, Menara MBMR Holdings Sdn Bhd and any other subsidiaries of MBMR which have asset values, revenues or losses of RM500,000 or above) (collectively referred to as Selected MBMR Group ) ( Due Diligence ) which will be undertaken as soon as practicable after UMWH receives the Acceptance of MBMR Offer. 2

3 For the avoidance of doubt, UMWH shall consider the results of the due diligence satisfactory unless: (aa) the information provided and responses received in connection with the requested information and documents are unsatisfactory (1) ; (bb) the results of the Due Diligence disclose any deterioration to the businesses, by an amount equivalent to RM50 million or more compared to the unaudited consolidated net tangible assets of MBMR excluding the book value of its associate investment in Perodua ( Adjusted NTA ) as at 31 December 2017 ( NTA Deterioration ) provided that for the purposes of determining the NTA Deterioration, no account shall be taken of any downward revaluation of property assets or impairments to asset values of the Selected MBMR Group requested by UMWH following the conduct of the Due Diligence; (d) (e) (f) the unaudited consolidated Adjusted NTA as at 31 March 2018 does not deteriorate by RM50 million or more compared to the unaudited consolidated Adjusted NTA as at 31 December 2017 ( Material NTA Deterioration ) provided that for the purposes of determining the Material NTA Deterioration, no account shall be taken of any revaluation of property assets or impairments to asset values of the Selected MBMR Group requested by UMWH following the conduct of the Due Diligence; UMWH obtaining the approval of its shareholders for the Proposed MBMR Acquisition ( UMWH Shareholders Approval on MBMR Acquisition ); the receipt of consents, approvals or clearance which are necessary for the Proposed MBMR Acquisition (including from the key principals (2) of MBMR, lenders of the Selected MBMR Group and governmental or official authorities, if required); no MBMR Termination Event (as defined below) and no Material Adverse Event (as defined below) having occurred between the date of the MBMR Offer and p.m. of the day prior to the MBMR Unconditional Date (as defined below); and the issuance and delivery of the redemption statements and letters of undertaking by the respective security agents of Med-Bumikar ( Security Agents ) to UMWH confirming, among others, the amount to be paid to the respective Security Agents to procure the release of the security interest created by Med-Bumikar and CSSB in favour of the respective Security Agents on the MBMR Sale Shares. (collectively referred to as MBMR Offer-CPs ) The MBMR Agreement will become unconditional on the date upon which the last of the MBMR Offer-CPs have been fulfilled or waived ( MBMR Unconditional Date ). 3

4 Material Adverse Event means, in relation to each of the members of the Selected MBMR Group, any event, circumstance or change (whether actual or threatened or whether arising before or after the date of the MBMR Offer) which, individually or in aggregate with the same or one or more events, circumstances or changes, result in: the unplanned complete shutdown of the plants or factories of each of the members of the Selected MBMR Group for a continuous period of 14 business days; revocation or suspension of the operating licences of each of the members of the Selected MBMR Group; and (iii) termination or suspension of the contract(s) between Perodua and OMI, a wholly-owned subsidiary of MBMR. (iv) MBMR Termination Events The MBMR Agreement may be terminated: by mutual written consent of the parties; by UMWH if any of the MBMR Offer-CPs (other than UMWH Shareholders Approval on MBMR Acquisition) is not satisfied or waived by the MBMR Long Stop Date or default of any pre-completion covenants or breach of any fundamental warranties by Med-Bumikar and/or CSSB; and by Med-Bumikar and/or CSSB if there is a breach of any of the warranties by UMWH. If the MBMR Agreement is terminated, the MBMR Agreement and all rights and obligations of the parties will immediately cease and be without liability against any party, except that if the MBMR Agreement is terminated by a party because of any breach of the MBMR Agreement by the other party or because one or more of the conditions to the terminating party s obligations under the MBMR Agreement is not satisfied as a result of the other party s failure to comply with its obligations under the MBMR Agreement: the terminating party s right to pursue all legal remedies will survive such termination unimpaired; and no party shall be liable for any indirect, consequential, loss of profit, incidental, special, punitive or exemplary damages. Notes: (1) For the avoidance of doubt, the information provided and responses received is considered unsatisfactory if: the information disclosed by MBMR is inaccurate and such inaccuracy cannot be rectified by MBMR on or before the completion of the MBMR Agreement (i.e. which shall take place on the 7 th business day after (and exclusive of) the MBMR Unconditional Date or such other day as the parties may agree at a.m. or at such other agreed time); or there has been a material non-disclosure of information, which if disclosed would have resulted in an NTA Deterioration. (2) Brand owners of the distributorship marques of the Selected MBMR Group. 4

5 3. PROPOSED PERODUA ACQUISITION 3.1 Background information on the Proposed Perodua Acquisition The conditional offer to PERC for its 14,000,000 ordinary shares in Perodua, representing 10.00% equity interest in Perodua ( Perodua Sale Shares ) is at a price of RM417.5 million or RM29.80 per Perodua Sale Share, valuing Perodua at RM4.175 billion (based on 100% equity value), and is to be satisfied in the following manner: the issuance of 49,261,084 new UMWH shares ( Consideration Shares ) at an issue price of RM6.09, being the 5-day VWAP of UMWH shares up to and including 6 March 2018, being the last trading day prior to the date of the Perodua Offer (as defined below); and cash of RM117.5 million ( Cash Consideration ). (referred to as Perodua Offer ) In the event Perodua declares, makes or pays any dividend and/or other distributions before completion of the Proposed Perodua Acquisition, the consideration for the Perodua Offer shall be reduced by the quantum of the net dividend and/or distribution per Perodua Sale Share. This shall be effected through a reduction in the Cash Consideration. UMW Corporation Sdn Bhd ( UMWC ), a wholly-owned subsidiary of the Company, currently holds 38.00% equity interest in Perodua. MBMR currently holds 22.58% effective equity interest in Perodua. 3.2 Background information on Perodua Perodua, a joint venture between Malaysian and Japanese partners was formed in It started operations as a private limited company under the name of United Motor Works (Sabah) Sdn Bhd and subsequently changed its name to Perusahaan Otomobil Kedua Sdn Bhd on 12 November Perodua is principally engaged in the business of investment holding and the provision of management and administrative services. Through its subsidiaries and associates, Perodua engages in the manufacturing, assembly, marketing and distribution of motor vehicles, spare parts, and other related activities. Its principal market is Malaysia. 3.3 Salient terms of the Perodua Offer Offer period The Perodua Offer shall remain open for acceptance until 5.00 p.m. on 28 March 2018, after which, it shall lapse unless UMWH agrees in writing to extend the period for which the Perodua Offer shall continue to be valid. Binding agreement The acceptance of the Perodua Offer by PERC ( Acceptance of Perodua Offer ) will constitute a binding agreement between the parties for the Proposed Perodua Acquisition ( Perodua Agreement ). 5

6 (iii) Conditions precedent The completion of the Proposed Perodua Acquisition is conditional upon the following conditions precedent being fulfilled or waived within 3 months from the date of Acceptance of Perodua Offer or such other date as may be mutually agreed between the parties ( Perodua Long Stop Date ): (d) (e) UMWH obtaining the approval of its non-interested shareholders for the Proposed Perodua Acquisition; PERC obtaining the consent of the other shareholders of Perodua for the Proposed Perodua Acquisition; the receipt of any other consents, approvals or clearances which are necessary for the Proposed Perodua Acquisition (including from governmental or official authorities); no Perodua Termination Event (as defined below) having occurred between the date of the Perodua Offer and p.m. of the day prior to the Perodua Unconditional Date (as defined below); and the receipt of approval in-principle for the listing and quotation of the Consideration Shares on the Main Market of Bursa Securities from Bursa Securities. (collectively referred to as Perodua Offer-CPs ) The Perodua Agreement will become unconditional on the date upon which the last of the Perodua Offer-CPs have been fulfilled or waived ( Perodua Unconditional Date ). (iv) Perodua Termination Event The Perodua Agreement may be terminated: by mutual written consent of the parties; by UMWH if any of the Perodua Offer-CPs, which includes the consent of the other shareholders of Perodua for the Proposed Perodua Acquisition, is not satisfied or waived by the Perodua Long Stop Date or default of any pre-completion covenants or breach of any warranties by PERC; and by PERC if there is a breach of any of the warranties by UMWH. If the Perodua Agreement is terminated, the Perodua Agreement and all rights and obligations of the parties will immediately cease and be without liability against any party, except that if the Perodua Agreement is terminated by a party because of any breach of the Perodua Agreement by the other party or because one or more of the conditions to the terminating party s obligations under the Perodua Agreement is not satisfied as a result of the other party s failure to comply with its obligations under the Perodua Agreement: the terminating party s right to pursue all legal remedies will survive such termination unimpaired; and no party shall be liable for any indirect, consequential, loss of profit, incidental, special, punitive or exemplary damages. 6

7 4. RATIONALE AND BENEFITS OF THE PROPOSALS 4.1 Proposed MBMR Acquisition and Proposed Perodua Acquisition (collectively, Proposed Acquisitions ) The Proposals will allow UMWH to increase its strategic stake in Perodua which continues to be the leading marque in Malaysia with successful recent launches. After the completion of the Proposed MBMR Acquisition and assuming full acceptance of the Proposed MO, the Company s effective interest in Perodua will increase from 38.0% to 60.6% which will further increase to 70.6% after the completion of the Proposed Perodua Acquisition. In addition to strengthening its exposure in the Perodua marque, UMWH will also increase its exposure in the commercial vehicle segment via MBMR s multi-brand dealerships i.e. Daihatsu and Hino vehicles. MBMR s auto parts manufacturing business, namely its wheels manufacturing, safety products and noise, vibration and harshness products, will also widen UMWH s offerings in the manufacturing segment. The Proposed Acquisitions are consistent with the Company s strategy to enhance its core businesses in the automotive, equipment and manufacturing and engineering segments. It will allow the Company to further improve its prospects in the automotive segment via leveraging on Perodua s strength in the national car segment, coupled with the Company s existing presence in the non-national car segment via the Toyota marque. The Proposed Acquisitions are also expected to allow the Company to benefit from economies of scale and create synergies, with an aim to enhance the Company s financial performance and shareholders value. 4.2 Proposed MO The Proposed MO provides an opportunity for UMWH to further increase its shareholding in MBMR after the Proposed MBMR Acquisition. 5. GROUP STRUCTURE BEFORE AND AFTER THE PROPOSALS As at 6 March

8 After the Proposals Notes: (d) Being the latest practicable date prior to the date of this Announcement. Held through UMWC, a wholly-owned subsidiary of UMWH. UMWH reserves the rights to nominate another affiliate(s) to undertake the Proposed MBMR Acquisition and the Proposed Perodua Acquisition. 100% ownership of MBMR is dependent on the outcome of the Proposed MO. 6. INTER-CONDITIONALITY OF THE PROPOSALS The Proposed MBMR Acquisition and the Proposed Perodua Acquisition are not conditional upon each other. The Proposed MO is conditional upon the MBMR Agreement becoming unconditional. On behalf of UMWH, Maybank IB wishes to emphasise that there is no certainty that the MBMR Offer and Perodua Offer will lead to any conclusive or definitive understanding between the parties. Should the MBMR Agreement or Perodua Agreement materialise, there is also no certainty that the MBMR Offer-CPs or Perodua Offer-CPs will be satisfied (as the case may be). There is therefore no certainty that UMWH will extend the Proposed MO for all the remaining MBMR Shares not already owned by UMWH and persons acting in concert with it, if any. An appropriate announcement will be made by the Company as and when there are material developments relating to the Proposals, including the finalisation of the source as well as terms of funding for the Proposals which shall be a combination of equity fund-raising, bank borrowings and/or internally generated funds. Shareholders are advised to exercise caution when dealing in MBMR Shares and to seek independent advice if they wish to do so. Maybank IB has been appointed as Principal Adviser to UMWH for the Proposals. This Announcement is dated 9 March