KUALA LUMPUR (May 15): V.S. Industry Bhd is acquiring a 60% stake in filter components manufacturer Skreen Fabric (M) Sdn Bhd (SFSB) for RM7.5 million.
In a filing with Bursa Malaysia, the company said it had today entered into a conditional subscription and share sale agreement with SFSB.
V.S. Industry said SFSB has been supplying filter components to the company and its subsidiaries for the production a key customer's orders.
Under the agreement, V.S. Industry will subscribe 250,000 new shares in SFSB for RM4 million and further acquire 200,000 SFSB shares for RM3.5 million.
As for the sale shares, the group said it is acquiring 199,995 shares from Han Ching Yuen and the remaining five shares from Han Kim Guan, both of whom are shareholders and directors of SFSB.
Upon completion of the exercise, SFSB's issued share capital will increase to 750,000 shares from 500,000 shares, subsequently making it a 60%-owned subsidiary of V.S. Industry.
The total cash consideration was arrived at on a willing-buyer and willing-seller basis, and will be funded via internally generated funds and/or borrowings.
On the exercise, V.S. Industry said the proposal is in line with its strategy to constantly review production efficacies and efficiencies.
"The proposal will allow the group to potentially increase the range of value-added services to its existing and prospective customers, and achieve cost saving following vertical integration, which is expected to be strategic and beneficial to the group in sustaining its growth," it said.
"The acquisition of SFSB will enable [V.S. Industry] to leverage on SFSB's technical expertise in the production of filter components," it added.
Additionally, the group said its capital injection to SFSB is intended to support the expansion and modernisation of its manufacturing facility, which will provide better assurance to its existing key customer in terms of quality and capacity.
Barring any unforeseen circumstances, the proposal is expected to be completed by the third quarter of 2017, said V.S. Industry.
V.S. Industry settled 1% higher at RM2.03, for a market capitalisation of RM2.4 billion.