Al-Futtaim, the automotive, retail, electronics and financial services conglomerate based in Dubai, has acquired a majority shareholding in Associated Motorways (AMW), a large Sri Lankan corporation with interests ranging from tyre manufacturing to car distribution. The deal, a 71 per cent share worth more than Dh300 million (US$81.6m), includes the acquisition of a 51 per cent stake at 174.50 Sri Lankan rupees (Dh5.95) per share, previously held by the Sri Lankan investment firm, Associated Electrical Corporation (AEC). The UAE group acquired an additional 20 per cent held by the second-largest stakeholder, John Keells, an investment firm.
The stake in the listed company was bought by Al-Futtaim group's wholly owned subsidiary, Al-Futtaim Engineering (AFE). In the UAE, Al-Futtaim owns the franchise for several automotive brands including Toyota, Lexus, Honda, Chrysler, Dodge, Jeep and Volvo. "This is a strategic investment as we look to grow our brands on the automotive side," said Geoffrey Watson, the head of corporate communications for Al-Futtaim. "It's a good business to have and it is part of the general expansion happening around the world."
The acquisition follows Al-Futtaim's recent purchase of an 88 per cent stake in Robinson Group, the Singapore-based retailer that owns the franchise for Marks & Spencer in Singapore and Malaysia. According to officials with Al-Futtaim, AMW's brand portfolio - which includes Maruti, Nissan, Renault, Suzuki, Yamaha, Piaggio, Goodyear tyres, Castrol and BP - is a strong fit with the Dubai company. "They are the Al-Futtaim of the Sri Lankan market," said Bob Farrow, the senior general manager of business development for Al-Futtaim Automotive. "Going into a foreign marketplace is very important to us."
Sri Lanka is an attractive destination for Al-Futtaim, given its potential in various areas of business, said Mr Farrow. Al-Futtaim is hoping to build a car assembly plant in Colombo and to enhance a tyre factory in the capital. "We are certainly interested in South Asia and it was really an opportunity that this was a business with potential, and the English skills in Sri Lanka are quite good," said Mr Farrow. "This business will give us a foothold in Sri Lanka and then we can expand from there."
In addition to its automotive portfolio, AMW has ventures in the property sector, including a recently signed memorandum of understanding with John Keells Holdings and Finlays. Ajita De Zoysa, the chairman of AMW, said that the deal with Al-Futtaim would bolster his company's presence on the international stage. "AMW is on the threshold of making several large investments, including an automotive assembly plant and a major real estate development," he said. "These opportunities have been the catalyst for this acquisition, which, through Al-Futtaim's role as a strategic investor in the business, will transform AMW into a multinational corporation."
Officials at Al-Futtaim said a second, and equally important, goal of such an acquisition was an exchange of skills and expertise. "We will set up apprenticeship schemes for mechanics, accountants and possibly salespeople as well," said Mr Farrow. @Email:vsalama@thenational.ae
