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DateLine Sunday, 3 August 2008

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Al-Futtaim acquires majority shares of AMW

Investment climate conducive:

Al-Futtaim, the Dubai headquartered automotive, retail, electronics and financial services conglomerate acquired 71%, the majority shares of Associated Motorways (AMW) plc early last week.


Ajita de Zoysa

Initially Al-Futtaim paid Rs 5.1 bln and acquired 51% of AMW held by Associated Electrical Corporation plc (AEC), an investment holding company.

This stake was purchased by the group's wholly owned subsidiary Al-Futtaim Engineering (AFE) which also purchased a further 20% of AMW shares held by the investment holding company John Keells.

Chairman, AMW Ajita de Zoysa said that it has been a family company for 50 years and the next phase of development is tremendous but we needed a huge capital infusion.

I don't like to get into too much debt as in my opinion it is the first step to the downfall of a company. I was introduced to Al-Futtaim by Alex Lovell and after carrying out a comprehensive due diligence as an initial step they decided to take over the majority control of the company.

It is an extremely friendly takeover, the management will not change and my brother will succeed me as the Chairman of the company, said de Zoysa.

This move will support the company's investment in a automotive assembly project as well as the real estate development project and also transform AMW into a multi-national corporation.

On the real estate front the MoU which we entered into with John Keells and Finlays will hold.

De Zoysa said that Al-Futtaim will bring in new management expertise and create employment opportunities.

All employees of AMW have now become part of a multi-national group with significant prospects for themselves with possibilities of assignments in any of the nine countries that Al- Futtaim group operates to advance their skills and economic prosperity.

He said that the sale of AMW shares will result in a significant increase in the cash flow of Associated ElectricalCorporation (AEC) and several options for the utilisation of these funds will be considered.

De Zoysa said that this is the second large foreign investment introduced by Lovell, the first being the substantial investment into Union Bank.

These two largest investments to a great extent will dismiss the common belief that the investment climate is not conducive for foreign investment and I believe that this augurs well for Sri Lanka to attract more Foreign Direct Investment.

Senior General Manager, Business, Al-Futtaim Engineering plc Bob Farrow said that they will open branches in the SAARC region with AMW as the headquarters.

He said that this acquisition is in line with the automotive development division's strategy, the group's global strategy and the direction in which CEO Omar Al-Futtaim wants to take the business. Farrow said.

we see enormous potential to grow AMW's core business and to expand to new sectors and markets.

There is strength and depth in the business and we see good reasons to be confident about the future of Sri Lanka's economy and this acquisition gives us a foothold we fully intend to build on, said Farrow.

He said that the AMW brand portfolio is a good fit with Al-Futtaim particularly its high volume market leading distributorships such as Maruti, Nissan, Renault, Suzuki, Yamaha, Piaggio, Goodyear tyres, Castrol and BP.

In the UAE we have the leading automotive brands such as Toyota, Lexus, Honda, Chrysler, Dodge, Jeep and Volvo.

This acquisition follows the recent acquisition of Singapore's prestigious retailer, the Robinson group by Al-Futtaim.

Established in the 1930's as a trading enterprise it now has interests in automotive, electronics, engineering, technology, retail, financial services and real estate.

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