Thursday, September 8, 2011

DRB Hicom to bank on M&A to drive future growth

SHAH ALAM: DRB-HICOM BHD [] will bank on selective mergers and acquisitions to fuel future growth, as organic growth was deemed to be too slow to realise its vision to become the top conglomerate in the country, said its group managing director Datuk Seri Mohamad Khamil Jamil.

However, he said any acquisition exercise that the group wanted to embark on should add value and be synergistic to its business model.

"When we acquired Pos Malaysia, many people said that the snail mail industry was a sunset industry. However, I look at the business opportunity that it presents to the group, with the network and areas that it reaches to," he said after its annual general meeting on Thursday, Sept 8.

Khamil said it would be synergistic to acquire PROTON HOLDINGS BHD [], as currently around 50% of DRB-Hicom's automotive sector revenue, which accounted for almost 60% of the group's revenue derived from the national car maker.

However, he said that after acquiring Pos Malaysia, the group wanted to first focus on realising the potential synergy in the group's operation by building a good business model to expand its operating profit.

He said DRB-Hicom plans to raise as much as RM1.7 billion in the next five years as the group embark onto the second phase of its five year growth plan which started in 2006.

The fund would be used to finance capital expenses such as to expand its automobile assembly plant in Pekan for the Volkswagen Passat assembly, a flagship campus of the international college of automotive manufacturing (ICAM) and to part fund the acquisitions of POS MALAYSIA BHD [], he said.

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