MeGroup to buy additional 25 percent of Honda dealership operator MJN Motors

Malaysia ringgit notesMalaysia ringgit notes

Malaysia-based MeGroup said on Wednesday it would buy an additional 25 percent of subsidiary MJN Motors, which owns and operates its Honda dealerships, for a performance-based consideration.

Wong Cheong Chee, executive chairman and CEO of MeGroup, said in a statement that boosting the MJN Motors stake had the potential to improve future earnings.

“Last year, Honda was Malaysia’s top non-Malaysian car marque and we want to capitalize on the strong demand trend for Honda cars in Malaysia,” Wong Cheong Chee said in the statement.

“We also expect to see an increase in business from the Honda 4S Dealership in Cheras, which will be offering 4S (body and paint) services upon the completion of the upgrade works to its current facilities, as well as the new Honda 3S Dealership in Kuala Selangor, which has been operating at its interim location for less than half a year,” the CEO said.

The stake will be acquired from Tan Kian Boon and Wong Sai Hou for 20 percent and 5 percent, respectively, of twice the level of fiscal 2019 and 2020 net profit after tax, paid in two tranches, MeGroup said in a filing to SGX before the market open on Wednesday. Fiscal 2019 ended on 31 March.

The first tranche to Tan will be paid either through an issue of MeGroup shares at S$0.205 per share, or by cash, while the second tranche will be paid in cash, it said. The first tranche to Tan has a maximum of 800,000 ringgit (S$265,624), with the total compensation capped a 3 million ringgit (S$996,089), the filing said.

Wong Sai Hou will receive his first and second tranches in cash, subject to a maximum of 200,000 ringgit for the first tranche and a total cap of 750,000 ringgit, the filing said.

Wong Sai Hou is the son of MeGroup’s CEO and Executive Chairman Wong Cheong Chee, and the brother of Executive Director Wong Keat Yee, while Tan is not related to any of the company’s executives, the filing said.

Tan and Wong Sai Hou will remain as directors of MJN Motors, MeGroup said.

The deal is expected to be completed by 30 September, it said.

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