KUALA LUMPUR (Jan 10): Total logistics solutions provider Tasco Bhd, whose shares are trading near to its one-year high, is venturing into cold chain logistics to further enhance its presence in the logistics business.

In a filing with Bursa Malaysia today, Tasco said it has entered into a sale and purchase agreement with Chang Kok Fai and Chan Sun Cheong to acquire Gold Cold Transport Sdn Bhd for up to RM188 million.

The purchase consideration, said the logistic group, was arrived at, based on the proforma consolidated earnings before interest, taxation, depreciation and amortisation (ebitda) of Gold Cold Group for the financial year ended Nov 30, 2016 (FY16), as warranted by the vendors, which shall approximate to RM20.8 million. 

It is also premised on the revalued net tangible assets (NTA) of Gold Cold of RM71.44 million, based on the audited consolidated as of Nov 30, 2015, as well as taking into account the fair market valuation of the lands and buildings held by the company as appraised by VPC Alliance (KL) Sdn Bhd (VPC). 

Gold Cold recorded a net profit of between RM4.52 million and RM6.84 million for FY13 to FY15. 

Tasco said an initial deposit for the proposed acquisition amounting to approximately RM3.72 million was paid and funded via internal funds. 

The remainder are expected to be funded via borrowings and/or via advances from its holding company Yusen Logistics Co Ltd (Yusen), but the exact quantum has not been determined. 

On rationale, Tasco noted the business environment in which it operates in, is very competitive.

"In order to gain new grounds, Tasco Group has to tap into the expertise within the Yusen network to venture into new areas of opportunity to further enhance its present strong logistics base.

"One such venture is into the niche area of cold chain logistics, which is a natural step forward given Tasco Group’s existing involvement in traditional ambient warehousing, as well as the vast experience in the fast-moving consumer goods and retail industries.," it added.

Gold Cold operates from its warehousing facilities in Shah Alam, Selangor, with a total storage capacity of approximately 25,600 pallets and have developed into a full-fledged chilled and frozen food transporter. It owns a sizeable fleet of 174 reefer trucks.

It is one of the largest cold chain logistics players in Malaysia in terms of storage capacity size, according to Tasco. 

"As such, the proposed acquisition is a concerted effort by us to enter the cold chain logistics business in a significant way with its ready capabilities to cater its multi-national customers’ needs and also to serve a wide base of industries, namely the food, pharmaceuticals, chemicals, electronics and other segments," said Tasco. 

Meanwhile, Tasco noted its gearing ratio will rise to 0.91 times, from 0.14 times currently, following the proposed acquisition. 

"The acquisition is expected to be completed in the second quarter of 2017, and is expected to contribute positively to our earnings for the financial year ending March 31, 2018 (FY18)," it added. 

At 10.35am, Tasco shares were unchanged at RM1.63, with thin trade of 49,000 shares done. This gives it a market value of RM326 million.