KUALA LUMPUR (May 22): Key Alliance Group Bhd is buying enterprise cloud solutions provider RapidCloud (M) Sdn Bhd for RM3.5 million cash.

In a filing with Bursa Malaysia today, Key Alliance said the proposed acquisition will provide it a turnkey operation of 10,000-customer strong hosting business, which is expected to be earnings accretive immediately.

"The proposed acquisition (also) allows the group to immediately leverage of an existing reseller relationship with AliBaba Cloud and Alibaba Global Gold Supplier," it added.

Key Alliance's wholly-owned subsidiary DVM Innovate Sdn Bhd entered into a share acquisition agreement with RapidCloud Asia Sdn Bhd today, which is wholly owned by London-listed RapidCloud International Plc, for the proposed acquisition of RapidCloud (M) Sdn Bhd.

Following the deal, DVM Innovate will incorporate a new private limited company called Progenet Innovations Sdn Bhd as a subsidiary, which will receive the transfer of sale shares, as well as to perform the obligations of DVM Innovate under the agreement. This is also part of the group's strategy to acquire synergistic businesses to tap into the growing e-commerce market in Malaysia, fostered by the launch of government-led Digital Free Trade Zone, said Key Alliance.

Key Alliance said the purchase consideration will be financed through a combination of internal funds.

"The proposed acquisition is not expected to have any material effect on the earnings of Key Alliance Group and earnings per share for the financial year ending March 31, 2018. The proposed acquisition is however expected to contribute positively to the future earnings of Key Alliance Group," it said.

Barring any unforeseen circumstances, the proposed acquisition is expected to be completed within two months.

As at 3.34pm, Key Alliance shares were traded up 1 sen or 25% at 5 sen, giving it a market capitalisation of RM40.95 million.