UMW Corporation Sdn Bhd (UMWC), a wholly-owned subsidiary of UMW Holdings Bhd, has agreed to form a joint venture (JV) with Japan's Komatsu Ltd under its heavy equipment business.
Under the proposed JV, UMW and Komatsu expect to further strengthen and expand market penetration of Komatsu's products in Malaysia, Brunei, Singapore, Myanmar and Papua New Guinea, according to a statement from UMW today.
UMWC and Komatsu inked a transaction agreement (TA) today to establish a JV company (JVco) for the purpose, which will be looking to capture new growth areas and firming up Komatsu's existing presence with the introduction of new products and services.
The TA came after UMW and Komatsu inked a letter of intent in August 2017 that spelt out their intentions to form a strategic partnership in the form of a JV in the heavy equipment business, premised on the long-standing business relationship between them.
Komatsu, established since 1921, is a Japanese multinational corporation engaged in the manufacturing of construction and mining equipment, utilities, forest machines and industrial machinery.
On the execution of the TA, UMW and Komatsu will enter into a JV agreement that will govern the next phase of cooperation between the two parties as JV partners. UMWC will hold a 74% stake in the JVco, while Komatsu will hold 26%.
"We are pleased with the opportunity to partner with Komatsu, the leading manufacturer of construction and mining equipment globally, as the proposed partnership will allow UMW to move up the value chain from a pure distributor to a JV partner.
"We look forward to the enhanced opportunities that this JV will bring to both organisations, especially via the expansion of new equipment variants and improvement of value-added services to maintain customers' loyalty and strengthen the market share in the territories that we operate," said UMW president and group chief executive officer Badrul Feisal Abdul Rahim.
UMW shares closed 23 sen or 3.85% higher today at RM6.20, after 765,800 shares were traded, giving it a market capitalisation of RM7.24 billion.