KUALA LUMPUR (July 2): Shareholders of MAG Holdings Bhd have approved the acquisition of a 100% equity interest in North Cube Sdn Bhd for RM200 million -- a deal that is more than the company's market capitalisation -- at the extraordinary general meeting (EGM) today.

In a statement, MAG said 99.9% of shareholders voted in favour of the deal, with the proposed acquisition to be satisfied via a cash consideration of RM60 million, issuance of 300 million shares at 20 sen per share and 400 million new redeemable preference shares (RPS).

The proposed acquisition also comes with a profit guarantee of not less than RM18 million in aggregate on a consolidated basis for the 18-month financial period ending June 30, 2022.

North Cube has 133 prawn cultivation ponds in Tawau, Sabah, and is expected to boost MAG's breeding capacity to 4,000 tonnes per year.

The acquisition follows MAG's first foray into aquaculture with the purchase of the Wakuba Farm in December 2019, which has 102 prawn cultivation ponds and is able to produce 2,000 tonnes of vannamei prawns (white leg shrimps or king prawns) per annum.

"The combined strength of 235 prawn cultivation ponds and its processing plants allows MAG Group to harvest both North Cube and its existing farms into finished products, creating economies of scale and synergy for the enlarged MAG group," it said.

According to MAG executive chairman Ng Min Lin, the acquisition of North Cube is earnings-accretive and will enable MAG and the company to leverage their combined strengths and speed up its expansion plan with continuous growth to emerge as a key player in the aquaculture industry in Malaysia.

“Having [our] own processing plant is an essential vertical integration in the supply chain of the prawn aquaculture business that provides the enlarged MAG group with operational and cost advantages. We are also exploring to produce more value-added products with better margins, such as 'peeled and deveined' and 'cooked' prawns to a wider geographical market globally,” Ng added.

At 3.54pm today, the counter was unchanged at 20.5 sen, valuing the group at RM154.11 million.