Colombo-headquartered law firm and financial adviser Julius Creasy advised Al-Futtaim on the purchase of 39.6 million shares, representing 71.15% of the capital of AMW at a price of SLR174.50 per share. Al-Futtaim bought the 51.15% stake held by investment holding company Associated Electrical Corp, as well as the 20% held by diversified investment company John Keells.
The price translates into a total outlay for Al-Futtaim of SLR6.91 billion ($64.2 million) for the 71.15% stake. Both transactions were done on the floor of the Colombo Stock Exchange.
As Al-Futtaim has acquired more than 50% of a listed company, in line with the CSE's takeover and mergers code, it will now make an offer for all remaining shares at the same price of SLR174.50 per share.
AMW was founded in 1949 as Sri LankaÆs first manufacturer of bicycle tyres. Since then it has grown into a manufacturer of all kinds of tyres ranging from small passenger car tyres to large off-the-road earthmover tyres. AMW is also a distributor of Nissan passenger cars, Maruti cars, Yamaha motorcycles, Renault vehicles, Piaggio light cargo vehicles, Eicher trucks and buses, Gizmo mopeds, Goodyear tyres, British Petroleum lubricants, Castrol motor oil and Yamaha motors.
"This acquisition is in line with the automotive development division's strategy,ö says Bob Farrow, senior general manager, business development at Al-Futtaim automotive. ôThere is strength and depth in the business and we see good reason to be confident about the future of Sri Lanka's economy. This acquisition gives us a foothold we fully intend to build on."
Farrow termed the acquisition a good fit for Al-Futtaim, which represents a range of automotive brands in the United Arab Emirates, including Toyota, Lexus, Honda, Chrysler, Dodge, Jeep and Volvo.
Deshabandu Tilak De Zoysa, who is the brother of current AMW chairman Ajita De Zoysa, will be appointed chairman of AMW. Ajita De Zoysa said that the acquisition is proof that the investment climate in Sri Lanka is conducive to foreign investment and sets a precedent for further such deals.
The Sri Lanka deal follows Al-Futtaim's acquisition of Singaporean retailer Robinson and Company in April and is in line with its stated intent to diversify globally. Al-FuttaimÆs bid valued Robinson at S$619 million ($454 million) and was successful in enticing the company's largest shareholders, Indonesia's Lippo Group and Oversea Chinese Banking Corp, to tender their shares, taking Al-Futtaim to a shareholding of more than 90% in the retailer. Robinson and Co is a holding company with interests in department stores, specialty stores and retail outlets which owns or manages the Robinsons, John Little, Marks & Spencer, Principles, Trucco, Coast, River Island and Fat Face franchises in Singapore and Malaysia.
AMW's shares gained 2.65% to reach the offer price of SLR174.50 yesterday.
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