KUALA LUMPUR (Feb 23): Scientex Bhd has proposed to acquire Klang Hock Plastic Industries Sdn Bhd (KHPI) for RM190 million cash, as the group aims to expand its product portfolio in the plastic packaging segment.

In a filing with the stock exchnage, the manufacturer and property developer said its wholly-owned subsidiary Scientex Packaging Film Sdn Bhd had entered into an agreement with vendors Law Wan Hong @ Lew Wan Hong, Ng Boon Eu, Lew Pei See @ Law Pei See and Lew Pei Lin @ Law Pei Lin to acquire the entire 20 million shares in KHPI.

Upon completion of the acquisition, KHPI will become a wholly-owned subsidiary of the company.

Scientex said the acquisition is expected to generate synergistic benefits to the group, as it continues seeking expansion of its product portfolio in the packaging industry.

“The proposed acquisition would enable the Scientex group to further expand and enhance its flexible plastic packaging products for fast moving consumer goods and food and beverage sectors, and industrial and agricultural films products and flexitank films,” it said.

The group also intends to capitalise on the enlarged production capacity and larger customer base in the local and global market, thus increasing the group’s market share and enhancing competitive advantage.

KHPI currently operates two manufacturing plants in Klang, with an annual capacity of 99,000 tonnes and yearly sales of about RM400 million.

It said the acquisition will boost its total annual output capacity by 30% to 455,000 tonnes, from 356,000 tonnes currently.

Scientex will be funding the acquisition via a combination of borrowings and internally-generated funds and hopes to complete the acquisition by the second quarter of 2018.

“With the acquisition of KHPI, our manufacturing segment will see a leap in revenue to exceed RM2 billion per year. This will not only strengthen our position in the global FPP market, but also immediately expand our capacity, product portfolio and clientele reach.

“Additionally, we see vast opportunities for the enlarged entity to enjoy synergistic benefits from operational efficiency, as well as product innovation initiatives,” said Scientex managing director Lim Peng Jin.