Thursday 28 Mar 2024
By
main news image

KUALA LUMPUR (June 23): Shareholders of information technology and trade facilitation services company Dagang NeXchange Bhd (DNeX) today approved the acquisition of a 60% equity interest in loss-making wafer foundry SilTerra Malaysia Sdn Bhd from Khazanah Nasional Bhd for a purchase consideration of RM163.8 million to be satisfied entirely by cash.

In a statement following its extraordinary general meeting (EGM) today, DNeX said the shareholders also approved the proposed diversification of DNeX's principal activities to include the manufacturing, sale and marketing of semiconductor wafers, semiconductor-related tools and other related activities.

"We are pleased to receive shareholders' approval for this major acquisition. Indeed, the semiconductor sector today is seeing demand firmly outstrip supply and this reality is expected to persist with increasing demand continuing up to 2024.

"Given the bullish outlook for the sector, this timely and strategically compelling acquisition as well as the diversification of the group's principal activities allow DNeX to benefit from sustained positive earnings and explore future growth potential over the medium to long term," its group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said.

To recap, DNeX, together with its partner Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre (Limited Partnership) (CGP Fund), won the bid in February to acquire SilTerra from Khazanah for a total of RM273 million, outbidding three other bidders, two of which were global companies.

DNeX will own 60% of SilTerra and CGP Fund will own 40%. They will share the capital outlays and injections according to their respective shareholding of the Kulim-based semiconductor foundry.

"Together with our partner CGP Fund, we look forward to growing SilTerra into a technology player capable of competing in the global marketplace. As part of our collaboration, we expect to turn SilTerra around in two years, with immediate focus on increasing plant utilisation, cost optimisation and expanding market access," Syed Zainal Abidin said today.

With the acquisition, DNeX aims to improve efficiencies and increase operational capacity while injecting new capital to remove bottlenecks and improve plant utilisation while leading SilTerra to ready market access including strategic customers and long-term supplier contracts by leveraging on CGP Fund's network.

Also in the pipeline are the adoption of technology upgrades including microelectromechanical system (MEMS) and silicon photonics thus enabling change in product mix that can generate improved business margin.

"Our partnership will also act as a bridge to introduce an established ecosystem of international technology players to strengthen the Malaysian market and improve Malaysia's position as a globally competitive player in this space," Syed Zainal Abidin added.

Shares of DNeX closed down 2.5 sen or 2.99% today to 81 sen with a market capitalisation of RM1.95 billion.

Edited ByLam Jian Wyn
      Print
      Text Size
      Share