KUALA LUMPUR (July 26): Mieco Chipboard Bhd is forking out RM58.58 million to take over SYF Resources Bhd's chipboard and medium-density fibreboard maker Great Platform Sdn Bhd to expand its production capacity.

The price tag comprises RM7.06 million as consideration for the purchase, with RM51.53 million being the liabilities of Great Platform to SYF that it is assuming under the deal, according to Mieco's Bursa Malaysia filing today.

"In view of the interests of Datuk Seri Ng Ah Chai in both Mieco and SYF, the proposed transaction is deemed as a related party transaction," said Mieco.

Mieco said the exercise will be financed via a combination of bank borrowing and internal funds.

As the business activities of Great Platform are similar to Mieco's, the exercise will serve as an opportunity to Mieco for its immediate expansion of production capacity, it said.

In addition, this exercise will enable Mieco to penetrate into the existing customer base of Great Platform.

"With the combined customer base between Mieco and Great Platform, it also allows them to cross sell their products to a wider customer base thus increasing the market presence of the enlarged Mieco Group," said Mieco.

The exercise is not expected to have any material effect on the earnings of Mieco for the financial year ending Dec 31, 2017 (FY17), but may contribute positively to its future earnings, it said.

It expects the acquisition to be done by the first quarter of 2018.