Four parties interested in Wearnes Automotive to submit their bids this week

Four parties keen on the Wearnes group's automotive business are likely to submit their bids this week, reported The Business Times. The interested bidders are said to be Swire Pacific, OUE, a Malaysian car distributor and Al-Futtaim Group.

Swire Pacific owns Cathay Pacific Airways and has a company distributing various automakers in Hong Kong, along with China and Taiwan. Also, it recently became a Volkswagen dealer in Malaysia and is said to be keen on expanding in the South-East Asian region.

OUE is a hotel and property firm whose Executive Chairman, Stephen Riady, plans to leave the motor operation to a successful Singapore car distributor, while he focuses on Wearnes' various property holdings here.

The Malaysian car group is a big distributor of a high-end sports car automaker in China, but is interested in acquiring more brands to expand its reach.

The United Arab Emirates (U.A.E.) based Al-Futtaim - parent company of Robinsons department store - has a major automotive business dealing with Japanese brands.

Amongst the four, Al-Futtain is seen as the most capable of forking out United Engineers' (UE) asking price of as much as $450 million for Wearnes Automotive, after UE bought the latter for almost $1 billion last May. The amount includes the stocks, infrastructure and land that are held by Wearnes Automotive.

Regardless of the valuable property and prestigious franchises in its stable, it is believed the bidders are more comfortable with a price tag of about 30 percent less than the asking price. This is because at the asking price, the price-earnings ratio (P/E ratio) is close to 20 or higher than an automotive player like Jardine Cycle & Carriage, who is not only a retailer but also a distributor and assembler of vehicles with a P/E ratio of 13 to 14, reported the business daily.