KUALA LUMPUR (Aug 6): Instacom Group Bhd has proposed to acquire 5.3 million shares, representing a 43.6% equity interest in Neata Aluminium (Malaysia) Sdn Bhd, an aluminium structure design and fabrication company, for RM73.58 million.
Besides the acquisition, the company also proposed a bonus issue of up to 657.1 million new shares on the basis of one bonus share for every three shares held to reward its shareholders.
In its filing with the exchange, Instacom (fundamental: 1.25; valuation: 0.9) said it has entered a share sale agreement with Golden Oasis Resources Sdn Bhd for the acquisition.
Instacom said the purchase consideration will be satisfied through a combination of the issue of new Instacom shares and cash of RM13 million, from the proceeds of the rights issue exercise completed last month.
Under the agreement, Golden Oasis has agreed to guarantee that the cumulative aggregate profit after tax of Neata for the financial years ending Dec 31, 2015 (FY15), and FY16, will not be less than RM34 million.
To recap, Instacom had completed the acquisition of a 35% stake in Neata last year for RM58.8 million, diversifying its earnings base to include aluminium design and fabrication, civil engineering and construction.
Since then, the company said the acquisition had brought various synergies to Instacom, resulting in higher income through the sharing of resources and know-hows, and expansion of business opportunities through cross-marketing of products and services and cross-referencing of customers.
Instacom expects to complete the proposals by the fourth quarter of 2015.
Instacom share price fell 0.5 sen or 4.17% to 11.5 sen, bringing its market capitalisation to RM156.1 million.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)