Dubai conglomerate notifies Colombo Stock Exchange as first stage of AED 300m deal secures 71 per cent holding in AMW

Dubai, United Arab Emirates, July 28, 2008: Al-Futtaim, the Dubai-headquartered automotive, retail, electronics and financial services conglomerate, today announced a deal worth in excess of AED 300 million to acquire a majority shareholding in Associated Motorways plc (AMW), one of the 'crown jewels' of Sri Lanka's corporate sector.

Earlier this morning, Al-Futtaim notified the Colombo Stock Exchange (CSE) that it had paid in excess of AED 165 million to acquire the 51 per cent holding in AMW held by Associated Electrical Corporation plc (AEC), an investment holding company. The stake in the listed tyre manufacturer to autos distributor was bought by Al-Futtaim group's wholly-owned subsidiary Al-Futtaim Engineering (AFE), which later purchased a further 20 per cent of AMW's shares held by investment holding company John Keells.

In line with the CSE's takeover and mergers code the offer will go unconditional following official confirmation of acceptances above the 50 per cent threshold. Bob Farrow, Senior GM - Business Development, Al-Futtaim Automotive, who has played a key role in the acquisition, said: "This is a hugely positive development for Al-Futtaim, for AMW, for Sri Lanka, its economy, and for the company's employees."

The acquisition follows Al-Futtaim's recent acquisition of Singapore's prestigious retailer Robinson Group. Mr. Farrow added: "We have very big plans for AMW. It is an extremely good business that has been one of the cornerstones of Sri Lanka's manufacturing and automotive sector. Al-Futtaim will bring new investment and management to build on AMW's considerable achievements since it was founded almost 60 years ago.

"This acquisition is in line with the automotive development division's strategy, with the group's global strategy, and the direction in which CEO Mr. Omar Al-Futtaim wants to take the business. We see enormous potential to grow AMW's core business and to expand into new sectors and markets. There is strength and depth in the business and we see good reason to be confident about the future of Sri Lanka's economy. This acquisition gives us a foothold we fully intend to build on."

Mr. Farrow said AMW brands portfolio is a 'good fit' with Al-Futtaim, particularly the Sri Lanka company's range of high volume market leading distributorships such as Maruti, Nissan, Renault, Suzuki, Yamaha, Piaggio, Goodyear tyres, Castrol and BP. In the UAE, Al-Futtaim has the country's leading automotive brands, including Toyota, Lexus, Honda, Chrysler, Dodge, Jeep and Volvo.

Outside the automotive portfolio, AMW's ventures in the real estate market, including a recently concluded MOU with John Keels Holdings and Finlays, replicates Al-Futtaim's strengths as a real estate developer and roads, construction and infrastructure specialist.

Mr. Ajita De Zoysa, Chairman of AMW and its corporate parent AEC, said: "AMW is on the threshold of making several large investments, including an automotive assembly plant and a major real estate development. These opportunities have been the catalyst for this acquisition and which, through Al-Futtaim's role as a strategic investor in the business, will transform AMW into a multinational corporation.

"After carrying out comprehensive due diligence, Al-Futtaim has decided as an initial step to take over the majority control of the company. It will bring in new management expertise, create employment opportunities and secure the future of the business and the company's employees both locally and internationally. From today, the employees of AMW become part of a multinational group, a hugely significant move that boosts their prospects considerably.

"Nevertheless, there will be continuity and I am pleased to announce that Al-Futtaim has proposed that my brother Deshabandu Tilak De Zoysa succeeds me as Chairman of the AMW Group."

"This is the latest in a series of large scale foreign investment in Sri Lanka and it dismisses once and for all the canard that the investment climate in Sri Lanka is not conducive. This acquisition augurs well for Sri Lanka and sets a welcome precedent to attract more foreign direct investment," he said.

-Ends-

About Al-Futtaim group:
Established in the 1930's, Al-Futtaim initially operated as a trading enterprise. Rapid development throughout the 1940's and 50's saw it become established regionally as an integrated commercial, industrial and services organisation and one of the leading business houses in the Gulf region. Today, it operates collectively more than 70 companies bearing the Al-Futtaim name, dominates many market segments in the UAE, and has expanded its sphere of operation to include Bahrain, Kuwait, Qatar, Oman and Egypt.

The group includes a diverse range of strategically positioned operating subsidiaries and associate companies. Its continuing investment in first class systems technology offers clear evidence of its commitment to maintaining leading edge performance and service delivery.

The success of Al-Futtaim can be attributed to a business approach that combines the ability to change with the traditional values of integrity, service and social responsibility that define its core business philosophy. This, linked with the group's belief in decentralisation, gives the heads of the operating companies a high degree of functional autonomy and authority, providing the group with essential flexibility, and individual employees a clearly defined work culture and sense of responsibility.

The Al-Futtaim group is divided into operational divisions Automotive, Electronics, Engineering, and Technology, Retail, Financial Services, and Real Estate.

Al-Futtaim represents many of the world's leading brands, including Toyota, Lexus, Honda, Volvo, Chrysler, Jeep and Dodge, Panasonic, Toshiba, Sanyo, Aftron, Alcatel, IKEA, Ace, Marks & Spencer, Ladybird, Hasbro, Toys R Us, Seiko, Raymond Weil, Westar, Kolber and Minato Pearls.

The latest development undertaken by Al-Futtaim is Dubai Festival City, a waterfront development offering a mix of entertainment, dining, shopping, marina, hotels, residential and office components. A groundbreaking ceremony recently took place for Cairo Festival City and others are planned throughout the region with investment from the recently closed Al-Futtaim Real Estate Investment Fund, the largest such fund in the region.

About AMW:
The company was founded 59 years ago, in 1949, by Sir Cyril De Zoysa, an icon among Sri Lanka's business community and uncle to AMW's current Chairman, Mr Ajita De Zoysa.  Initially, the company's principal line of business was retreading tyres for what was then the country's largest public transport company, known as South Western, which was also established by him. Sir Cyril started industrialisation in Sri Lanka with the manufacture of motorcycle tyres and batteries.

The natural evolution of the business saw the formation of a group of industries and the Associated Motorways Group of Companies came into existence. Associated Rubber Industries Limited became the pioneer bicycle tyre manufacturer. Associated Vacu-Lug Company Limited was the first (and only) giant off-the-road tyre rebuilder. Associated Batteries Company Limited began the manufacture of the "Yuasa" Automotive Batteries and Associated Cables Limited was the pioneer cable manufacturer -this Company is now functioning as an independent entity. Associated Electrical Corporation Limited started the manufacture of the tamed Sisil Refrigerator.

Today, AMW: has become Asia's second oldest distributor for Nissan Motor Co - the relationship began in 1957 - and is the sole distributor for Maruti, Yamaha motorcycles and outboard motors, Renault,  Piaggio Ape cargo vehicles, Eicher trucks and buses , Gizmo, the No.1 moped in Sri Lanka, Goodyear tyres, BP's range of lubricants , Castrol motor oil and AMW Tyre Retreading

It also manufactures batteries and tyres and re-treads for light and heavy vehicles.

For more information, please contact: 
Geoffrey Watson
Head of Corporate Communications
Al-Futtaim
Tel: +971 4 228 2101 Ext.214
Fax: +971 4 227 9801
Email: geoffrey.watson@alfuttaim.ae
Web: www.al-futtaim.com 

© Press Release 2008