The Board of Directors of DRB-HICOM Berhad ("DRB-HICOM" or the "Company") has authorised Malaysian International Merchant Bankers Berhad ("MIMB") to release the following announcement.

"QUOTE

1.0 INTRODUCTION

Further to the announcement dated 21 March 2002, the Board of Directors of DRB-HICOM is pleased to announce that DRB-HICOM and United Overseas Bank Limited ("UOB") proposes to form a strategic alliance by merging and consolidating their insurance businesses in Malaysia via a newly incorporated joint venture company, namely Tower-Ed Sdn Bhd ("Tower-Ed").

Tower-Ed will be 51% owned by Gadek (Malaysia) Berhad ("Gadek"), a wholly-owned subsidiary of DRB-HICOM and 49% owned by United Overseas Bank (Malaysia) Bhd ("UOBM"), a wholly-owned Malaysian subsidiary of UOB.

As part of the joint venture, Tower-Ed will enter into several agreements to acquire the following :-

2.0 DETAILS OF THE PROPOSALS

2.1 The Proposals involve the following steps:-

Step 1 : Proposed EON CMG Acquisition
On 28 June 2002, Tower-Ed entered into a conditional Sale and Purchase Agreement with Edaran Otomobil National Berhad ("EON") and The Colonial Mutual Life Assurance Society Limited ("Colonial") (collectively referred to as the "EON CMG Vendors") ("SPA (EON CMG)") to acquire 100% equity interest in EON CMG comprising 80,500,000 shares for a total purchase consideration of RM81.500 million to be satisfied by cash ("Proposed EON CMG Acquisition").

Information on the EON CMG Vendors are set out in Appendix I.

Step 2: Proposed Subscription
On 29 June 2002, UOBM entered in a conditional Subscription Agreement with Tower-Ed ("Subscription Agreement") to subscribe for a total of 73,400,000 new shares in Tower-Ed at an subscription price of RM1.63 per share ("Proposed Subscription").

Step 3 : Proposed SEA Acquisition
On 28 June 2002, Gadek entered into a conditional Sale and Purchase Agreement with Tower-Ed ("SPA (SEA)"), for the disposal by Gadek to Tower-Ed of the entire equity interest held by Gadek in South East Asia Insurance Berhad ("SEA") comprising 68,094,444 shares or 68.09% of the issued and paid-up share capital of SEA for a total purchase consideration of RM76,410,138 to be satisfied by the issuance of 76,410,138 new shares or 51% in the share capital of Tower-Ed at an issue price of RM1.00 per share ("Proposed SEA Acquisition").

Step 4 : Proposed OUIM Acquisition
On 28 June 2002, SEA entered into a conditional Sale and Purchase Agreement with OUIM ("SPA (OUIM)") for the proposed acquisition of certain assets, liabilities and general insurance business of OUIM ("OUIM Business") for a total cash consideration of RM93.794 million ("Proposed OUIM Acquisition").

SEA shall acquire the OUIM Business excluding dividends accruing to OUIM and a cash sum of RM75 million placed in fixed deposits by OUIM (with interest accruing thereon up to the completion date of the Proposed OUIM Acquisition) ("Excluded Assets") for a total cash consideration of RM93.794 million. The Excluded Assets represents proceeds from several capital raising exercises undertaken by OUIM during 2001 in order to meet BNM's minimum capital requirement of RM100 million.

Thereafter, the OUIM Business will be merged with that of SEA's insurance business via the transfer of the OUIM Business to SEA.

The Proposed EON CMG Acquisition, Proposed Subscription, Proposed SEA Acquisition and Proposed OUIM Acquisition are collectively referred to hereinafter as the "Proposals".

2.2 In addition, DRB-HICOM and UOBM have given a guarantee and indemnity to the EON CMG

Vendors and have undertaken to procure the due and punctual performance and observance by Tower-Ed of all its obligations, commitments, undertakings, warranties and indemnities under the SPA (EON CMG) (the "Guaranteed Obligations"). DRB-HICOM and UOBM have further agree to indemnify the Vendors for any of the Guaranteed Obligations (including without limitation any monies payable), up to a maximum aggregate sum of RM41.565 million being 51% of the purchase consideration under the SPA (EON CMG).

The abovesaid guarantee and indemnity may be enforced by the EON CMG Vendors jointly or, each of them severally. The liability of DRB-HICOM and UOBM under the guarantee and indemnity is several (and not joint) in the proportion of 51% and 49% respectively.

To govern their rights and obligations as shareholders of Tower-Ed, Gadek and UOBM have also entered into a conditional Joint Venture and Shareholders' Agreement ("JVSA") on 1 July 2002.

2.3 Basis of Consideration

2.4 Salient Terms of the Agreements entered into by DRB-HICOM, Gadek and SEA

2.4.1 Conditions Precedents to the JVSA

The JVSA is conditional upon the following being satisfied within 6 months of the date of the JVSA:-

2.4.2 Conditions Precedent to the SPA (SEA)

The SPA (SEA) is conditional upon the fulfilment of the following conditions precedent within four months or such later date as may be mutually agreed:-

2.5 Information on UOBM

UOBM is a subsidiary of the UOB of Singapore and was incorporated in Malaysia in 1993. In 1994, UOBM took over the operations of Lee Wah Bank Limited. Subsequently, on 7 June 1997, UOBM merged with Chung Khiaw Bank (Malaysia) Bhd.

The principal activity of UOBM is that of commercial banking and financial services. As at 15 June 2002, the authorised share capital of UOBM was RM2,000,000,000 comprising 2,000,000,000 ordinary shares of RM1.00 each, of which RM470,000,000 comprising 470,000,000 ordinary shares of RM1.00 each are issued and are fully paid-up.

2.6 Information on Tower-Ed

Tower-Ed was incorporated in Malaysia on 10 April 2002. The principal activity of Tower-Ed is that of investment holding. As at 15 June 2002, the authorised share capital of Tower-Ed was RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which RM2.00 comprising 2 ordinary shares of RM1.00 each are issued and are fully paid-up.

2.7 Information on EON CMG

EON CMG was incorporated in Malaysia on 1 October 1993. The principal activity of EON CMG is that of underwriting of life insurance businesses. As at 15 June 2002, the authorised share capital of EON CMG was RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each, of which RM80,500,000 comprising 80,500,000 ordinary shares of RM1.00 each are issued and are fully paid-up.

2.8 Information on SEA

SEA was incorporated in Malaysia on 7 December 1973 The principal activity of SEA is that of underwriting of general insurance businesses. As at 15 June 2002, the authorised share capital of SEA was RM250,000,000 comprising 250,000,000 ordinary shares of RM1.00 each, of which RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each are issued and are fully paid-up.

2.9 Information on OUIM

OUIM was incorporated in Malaysia in 1983. The principal activity of OUIM is that of underwriting of general insurance businesses. As at 15 June 2002, the authorised share capital of OUIM was RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each, of which RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each are issued and are fully paid-up.

3.0 RATIONALE FOR THE PROPOSALS

The rationale of the Proposals is to strengthen, consolidate and reorganise the life and general insurance businesses within the DRB-HICOM Group under Gadek in line with one of the objectives of the BNM Financial Sector Masterplan to consolidate and improve the level of efficiency, competitiveness and effectiveness of insurance companies.

The Proposals will also enable the DRB-HICOM Group to expand its insurance business with the UOB Group as its strategic partner with a view to becoming a major industry player in Malaysia under the new financial landscape.

4.0 EFFECTS OF THE PROPOSALS

4.1 On Share Capital and Substantial Shareholders' Shareholdings

The Proposals would not have any effect on the issued and paid-up share capital of DRB-HICOM and its substantial shareholders' shareholdings as the Proposals do not involve any issue of new shares by the Company.

4.2 On NTA

The Proposals would not have any major effect on the NTA of the DRB-HICOM Group.

4.3 On Earnings

As the Proposals will be completed after the financial year ended 31 March 2002, it will not have any impact on the earnings of the DRB-HICOM Group for the financial year ended 31 March 2002.

The Proposals are expected to have a positive effect on the earnings of the DRB-HICOM Group in the future.

4.4 On Gearing

The Proposals would not have any effect on the gearing of DRB-HICOM.

5.0 RISK FACTORS

5.1 The Board of Directors of DRB-HICOM does not foresee any extraordinary material risk factor associated with the Proposals except for the competitive risk, business risks (including but not limited to risks of changes in tariffs, fraudulent claims, compliance risk, etc.), economic risk, investment risks (including interest rate fluctuations, and debt and equity market conditions), risks arising from changes in government policies/legislation, etc., normally associated with the insurance industry, for which the DRB-HICOM group is already involved in. No assurance can however be given that any adverse developments in such risk areas would not affect the business and/or financial position/performance of Tower-Ed

6.0 PROSPECTS

DRB-HICOM notes that in general, the performance of the insurance industry as a whole has improved in recent years, whereby : ".. Despite the less favourable environment in 2001, the insurance industry recorded strong growth of 12.4% in premium income. The strengthened capitalisation of he industry since 30 September 2001 has built greater financial resilience among insurers, a key factor in advancing the consolidation of the industry through mergers and acquisitions. Eight mergers and acquisitions have been completed and seven others involving 13 insurers are currently in progress. Going forward, the insurance industry has the potential for a quantum leap in growth, given the low penetration rate and arising incomes. This growth potential is being realised through initiatives under Phase 1 of the Financial Sector Masterplan, which aims at building capacity and efficiency as well as strengthening consumer protection. In the takaful industry, the growth momentum was maintained in the year 2001 with the combined takaful funds reaching RM2.4 billion or 4.6% (2000:2.6%) of the total assets of the insurance funds.."

Source: www.bnm.gov.my/pa/2001/0328a.htm - The 2001 Insurance Annual Report.

7.0 APPROVALS REQUIRED

7.1 The Proposals are subject to, inter-alia, the approvals of the following :-

8.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

8.1 Save as disclosed below, as far as the Board of DRB-HICOM is aware, none of the Directors and major shareholders of DRB-HICOM or any person connected with them, have any interest, direct or indirect, in the Proposals.

Directors

Major Shareholders

Employees Provident Fund Board, Khazanah Nasional Berhad and Permodalan Nasional Berhad are major shareholders of EON and DRB-HICOM.

9.0 DIRECTORS' OPINION

9.1 The Board of Directors of DRB-HICOM is of the opinion that the Proposals are in the long term interest of the DRB-HICOM group.

10.0 SC GUIDELINES/LISTING REQUIREMENT OF THE KLSE

10.1 To the best of the knowledge and belief of DRB-HICOM and MIMB, the Proposals do not involve any departure from the Policies and Guidelines on Issue/Offer of Securities issued by the SC.

10.2 As far as DRB-HICOM is concerned, the Proposals are not related party transactions under Part E of Chapter 10 of the Listing Requirements of the KLSE.

11.0 COMPLETION OF THE PROPOSALS

11.1 The Directors of DRB-HICOM expect to complete the Proposals by end-December 2002.

12.0 DOCUMENTS FOR INSPECTION

12.1 A copy of the JVSA, SPA (SEA), SPA (EON CMG), SPA (OUIM) and Subscription Agreement are available for inspection during normal business hours at the Registered Office of DRB-HICOM at Level 5, Wisma DRB-HICOM, No. 2 Jalan Usahawan UI/8, Seksyen UI, 40150 Shah Alam, Selangor within 14 days from the date of this announcement.

UNQUOTE"

For and on behalf of
DRB-HICOM BERHAD
MALAYSIAN INTERNATIONAL MERCHANT BANKERS BERHAD
This announcement is dated 1 July 2002
c.c. Issues and Investment Division
Securities Commission
(Attn.: Mr Wong Wing Seong, Director)

INFORMATION ON THE EON CMG VENDORS

1.0 EON

EON was incorporated in Malaysia on 16 May 1984 under the Companies Act, 1965 as a private limited company. Subsequently, on 26 July 1990, it was listed on the Main Board of the Kuala Lumpur Stock Exchange ("KLSE"). EON is also an associated company of DRB-HICOM.

The principal activity of EON is that of marketing of Proton vehicles and related spare parts and servicing. Other auto-related activities include distribution and retailing of motor vehicles in Singapore, warehousing of parts and components, the manufacture of auto-related products and automotive conversion. EON is also involved in the banking and stockbroking businesses. Other activities include property development and investment, general trading and the provision of security services.

As at 31 May 2002, the authorised share capital of EON was RM500,000,000 comprising 500,000,000 ordinary shares of RM1.00 each, of which 229,354,823 ordinary shares were issued and fully paid-up.

The cost of investment in EON CMG by EON amounted to RM50.023 million after the provision for diminution in value of investment of RM31.748 million made in the year 2000.

2.0 COLONIAL

2.1 Colonial was incorporated in Australia on 4 November 1873. The principal activity of Colonial is that of life insurance and all cognate business. As at 15 July 2002, the issued and paid-up share capital of Colonial was $3,515,625,853 AUD comprising 3,515,625,853 ordinary shares of $1.00 AUD each.