Introduction to the Financing and Acquisition
In a significant move set to bolster Malaysia’s stainless steel industry, AmBank (M) Bhd has granted financing facilities to Worldwide Stainless Sdn Bhd, an affiliate of Yankong Group, for the acquisition of Bahru Stainless Sdn Bhd. This acquisition was finalized in November 2024 with a total transaction value of RM1.06 billion.
AmBank provided the crucial financing support by covering 80% of the acquisition cost, which amounts to around RM850 million, with the remaining amount allocated to working capital. This acquisition is seen as a strategic move to strengthen Malaysia’s position in the global stainless steel market, driving both domestic and international business opportunities.
Financial Structure and Details of the Deal
The financing structure of the deal includes RM450 million allocated for the acquisition itself, while the remaining RM600 million is earmarked for the operational and working capital needs of Worldwide Stainless. The working capital will be used to import raw materials, particularly stainless steel coils, which are critical for the production of stainless steel products.
By securing 80% financing from AmBank, Worldwide Stainless is positioned to optimize the purchase without significantly draining its own financial reserves. This strategic move also allows the company to stay competitive in the evolving global steel market.
Strategic Importance of the Acquisition
The acquisition of Bahru Stainless Sdn Bhd, one of Malaysia’s well-established stainless steel manufacturers, is set to provide Worldwide Stainless with enhanced production capabilities, access to advanced technology, and an expanded market reach. This will strengthen Malaysia's local stainless steel production capacity, ensuring that the country can meet rising demand both domestically and abroad.
Opportunities in the Global Market Post-Acquisition
Danny Tan Wei Beoh, CEO of Worldwide Stainless and Yankong Group, highlighted how global market shifts, particularly changes in US trade policy, could benefit the company. Under the previous administration’s 25% tariff on steel imports, the US market saw significant shifts in sourcing strategies. China-based suppliers, once the dominant source of stainless steel, could no longer supply steel products to the US market competitively, as they had done previously through trade routes involving Canada, Mexico, and South Korea.
With these new tariff restrictions in place, the US is now seeking alternative suppliers to meet its growing demand for stainless steel. Worldwide Stainless stands to benefit from these shifts, as American buyers are actively seeking suppliers outside of China. This presents an excellent growth opportunity for Worldwide Stainless to increase exports to the US, positioning the company to tap into this high-demand market.
Malaysia’s Growing Role in the Global Stainless Steel Market
This acquisition represents not only a bold move for Worldwide Stainless but also a significant step for the entire Malaysian stainless steel industry. Malaysia’s stainless steel sector has witnessed notable growth, and this acquisition will further propel the country into the global spotlight as a key player in the production and export of stainless steel.
AmBank’s financing, in partnership with Worldwide Stainless, provides much-needed support for expanding production capacity and meeting global demands. With favorable conditions and support from financial institutions like AmBank, Malaysia is poised to continue developing a competitive edge in the global steel industry, particularly in the stainless steel sub-sector.
Conclusion
AmBank’s financing of Worldwide Stainless’s acquisition of Bahru Stainless marks a pivotal moment in the growth of Malaysia’s steel industry. The $90 million financial facility, coupled with the strategic acquisition of a leading steel company, promises to not only expand Malaysia's manufacturing capacity but also offer new opportunities in international trade, particularly in the US market.
Key Takeaways:
• AmBank (M) Bhd provided a RM1.06 billion financing package to Worldwide Stainless Sdn Bhd for the acquisition of Bahru Stainless Sdn Bhd from Spain’s Acerinox S.A..
• 80% of the acquisition value was financed by AmBank, with the remaining funds allocated for working capital.
• The acquisition is a major step for Malaysia’s stainless steel industry, with Worldwide Stainless now positioned to expand production and enhance market reach.
• The US steel tariff policy has opened up new export opportunities for Worldwide Stainless as American buyers seek alternative suppliers.
• The financing deal highlights AmBank’s role in supporting the growth of middle-market manufacturing in Malaysia, with a focus on global competitiveness.
• Worldwide Stainless plans to leverage its new capabilities to meet the rising demand for stainless steel both locally and internationally.
