Conglomerate Sime Darby has agreed to buy a controlling stake in three companies involved in auto distribution and parts manufacturing as part of moves to expand its motor vehicle business.

In a weekend statement, Sime said it had proposed buying a 51 percent stake each in Hyundai Berjaya Corp, Hyumal Motor and Inokom Corp for a total of RM641.7 million ringgit in cash.

Hyundai-Berjaya is the distributor for South Korea's Hyundai vehicles, including spare parts and accessories. Hyumal distributes certain Hyundai passenger cars and related spare parts, and provides workshop services. Inokom assembles light commercial vehicles.

Sime Darby, which has a large motor arm involved in the import, assembly and distribution of marques including BMW, Land Rover and Ford, said the proposed acquisitions were in line with its strategy to expand its range of vehicles.

It said the proposed acquisitions were expected to give its motor vehicle business a boost as Hyundai was one of the best-selling and fastest growing brands in Malaysia.

Balanced portfolio

Sime Darby chief executive Nik Mohamed Yakcop said the proposed acquisitions would provide a more balanced portfolio of marques and reduce its exposure to the euro.

He said the move was in line with the company's growth objectives and was an appropriate addition to help position the business to benefit from the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta).

Under Afta, import tariffs for most products in the region were cut to below five percent from last year. Malaysia obtained a two-year reprieve for its auto industry until 2005 but it recently said it would further defer reducing duties to the required level until 2008. - AFP