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

In a filing with Bursa Malaysia yesterday, Tasco said it had entered into a sale and purchase agreement with Gold Cold Transport Sdn Bhd’s owners Chang Kok Fai and Chan Sun Cheong to acquire the company for up to RM188 million.

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

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

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 by internal funds. The rest will be funded via borrowings and/or advances from its holding company, Yusen Logistics Co Ltd of Japan, but the exact quantum had not been determined.

On the rationale, Tasco noted that 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 opportunities 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 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, which 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 [to] its multinational customers’ needs and also to serve a wide base of industries, namely the food, pharmaceuticals, chemicals, electronics and other segments,” said Tasco.

Meanwhile, it noted that 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,” it added.

Tasco shares closed down three sen or 1.84% at RM1.60 yesterday, bringing a market capitalisation of RM320 million.