The planned acquisition of UEM Group by MMC Corp Bhd is seen as a move for the highways under the group but there are other synergies that may be extracted after the takeover.
Sources with knowledge of the proposal say concerns over the indebtedness of MMC are overblown should MMC secure PLUS Expressways Bhd as the shared benefits from other businesses in UEM would offset the reduction in profit from the capping of toll rates.
“There is great opportunity for the two entities to combine their expertise and further strengthen their position in the various sectors,” said the source. “These synergies could invariably unlock benefits in terms of scale and efficiency, which could translate into higher margins and returns.”
In some ways, UEM and MMC share a number of similarities.
UEM has built highways and bridges while MMC was part of the consortium that built the SMART tunnel and is currently involved in the electrified double-tracking railway project.
In terms of land, MMC has almost 5,000 acres in Johor, which ranks it as one of the biggest private land owners in the country. With UEM Land, too, a major player in the property development business in Johor, and with relationship between Malaysia and Singapore warming up, the combination of both companies’ assets would be positive and add value to MMC.
“This can go both ways as MMC may have areas of strength from which UEM may tap into, which ultimately will enhance their value to their shareholders,” said the source.
The source said that should the proposal of no toll increases and no extension of the concession period materialise, it would benefit both the Government and the people.
“This would mean the rakyat would not bear the burden of increased costs and this also relieves the Government from the burden of having to manage this strategic asset and entrust the private sector to carry out this responsibility efficiently within the set parameters,” the source added.
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By JAGDEV SINGH SIDHU
jagdev@thestar.com.my
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