KUALA LUMPUR (July 8): Sime Darby Bhd's acquisition of Salmon Earthmoving Holdings Pty Ltd (Salmon Australia), an Australian provider of rental and maintenance services servicing the civil construction, agricultural and mining sectors, is viewed positively by analysts who believe it will further strengthen the group's market position in Australia.

Sime Darby announced yesterday that it was acquiring Salmon Australia for A$104 million (RM327 million) to expand its rental business and also to diversify into the civil construction industry. The acquisition exercise is expected to be completed by August.

"The acquisition will allow Sime Darby to expand its market into the civil construction sector (currently Sime Darby is concentrated more into the mining sector) and also into the New South Wales region (currently Sime Darby focuses more on the Queensland region). Sime Darby will continue to look out for more pockets of acquisitions to complement and enhance its core segments i.e. industrial and motor business in existing geographical regions," HLIB Research said in a note to investors today.

Nevertheless, the research firm sees the contribution will be relatively immaterial to the current group’s large earnings base of RM1.1 billion to RM1.2 billion.

In a separate note, PublicInvest Research said the acquisition will allow Sime Darby to capitalise on the Australian government's 10-year A$15.2 billion infrastructure project announced recently as part of its stimulus measure to support employment in the post-pandemic economy.

"We are positive on the acquisition as it complements its existing Australia operations and offers diversification to other original equipment manufacturer brands including Hitachi, Komatsu, Mack and Isuzu equipment," the local research firm added.

At 10am, Sime Darby shares were down three sen or 1.37% at RM2.16, bringing a market capitalisation of RM14.76 billion.