KUALA LUMPUR (May 17): Borneo Oil Bhd is acquiring a 22.49% stake or 28.36 million shares in Sabah-based clinker and cement products manufacturer Makin Teguh Sdn Bhd (MTSB) for a purchase consideration of RM73.56 million.

Borneo Oil said it on Tuesday (May 17) entered into a sale share agreement with MT 23 Resources Ltd to buy the stake in MTSB, according to its filing with the local bourse.

MT 23 is the legal and beneficial owner of 28.78% of the equity in MTSB represented by 36.28 million shares of the issued and paid-up share capital of the company.

According to Borneo Oil, the acquisition presents an opportunity for the group to move downstream its quarrying resources to further boost its profit.

"There is synergy between the BOB Group's (Borneo Oil) existing limestone quarrying business operations and MTSB's clinker and cement plant," said the group.

MTSB owns an integrated clinker and cement plant (ILPP) in Lahad Datu, Sabah, which is situated adjacent to the limestone quarry land owned by Borneo Oil.

"MTSB has entered into a long-term supply contract for limestone with BOB's subsidiaries on the current stockpile and overburdened waste from existing quarrying operations to supplement the ILPP's initial limestone feedstock requirements. This supply of current stockpile and recovery waste for downstreaming activity is also in line with BOB Group's initiative towards zero waste and reusing/upcycling all materials.

"This synergistic alliance will enable MTSB and BOB to pool their combined limestone resources and position BOB Group for future expansion," said Borneo Oil.

It said the purchase consideration of RM73.56 million, arrived at a "willing buyer, willing seller" basis, will be satisfied by way of treasury share transfer and cash from internally generated funds.

"The proposed acquisition is not expected to have any material effect on BOB Group's earnings per share and NA (net assets) per share for the financial year ending June 30, 2022. However, the proposed acquisition is expected to contribute positively to the future earnings and NA of BOB Group," it added.

Barring unforeseen circumstances, the exercise is expected to be completed within 12 months from the date of this announcement.

Shares of Borneo Oil jumped 20% or half a sen to close at three sen on Tuesday, valuing the group at RM205.28 million.