KUALA LUMPUR (Apr 28): Maxwell International (Hong Kong) Ltd, an intermediary unit of Maxwell International Holdings Bhd, has aborted a plan to acquire a 92.5% stake in Lim Ying Ying Ltd (LYY) for HK$15.6 million (RM7.8 million).

No reasons were given for the termination.

In a filing with Bursa Malaysia today, Maxwell (fundamental: 1.3; valuation: 1.5) said Maxwell Hong Kong had vide its solicitors issued a letter dated April 17, 2015 to terminate the conditional share sale and purchase agreement (SPA) entered into with George Koh Wing-On and Alan Ho Hiu-Yan (vendors) on Dec 3, 2012 for the proposed acquisition.

The vendors through its solicitors had issued a letter of confirmation to accept the termination of the SPA on the same day.

“The board of directors, having considered all aspects of the termination of the SPA, is of the opinion that the termination is in the best interest of Maxwell,” the group said.

Under the termination of the agreement, both Koh and Ho will be entitled to retain the sum of HK$11.7 million previously paid by Maxwell Hong Kong, all inter-company balances between LYY and its subsidiary and Maxwell Hong Kong will be written-off, respectively and all operations loan by Koh will not be claimed back from Maxwell Hong Kong.

The brand of LYY will also remain in the ownership of LYY.

Maxwell said the termination of the SPA is not expected to have any effect on the issued share capital and substantial shareholders’ shareholding of the group.

Previously, Maxwell had proposed the acquisition as it will enable the shoe maker to diversify into retailing and branding.

It had said that LYY's goodwill was determined at HK$15.8 million for a number of reasons, including that it has a readily available management team, distribution networks and software.

LYY has been in the garment business for more than 30 years and has registered trademarks in Hong Kong and China.

Maxwell shares closed one sen or 6.45% lower at 14.5 sen today, with a market capitalisation of RM61.82 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.)