Thursday 28 Mar 2024
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KUALA LUMPUR: Plastic products maker SKP Resources Bhd will buy the entire business of smaller rival Tecnic Group Bhd for RM200 million, confirming a report by The Edge Financial Daily on Sept 30.

The proposed acquisition will be satisfied via RM100 million in cash and an issuance of 172.4 million new shares in SKP at 58 sen per share.

In a filing with Bursa Malaysia yesterday, SKP said it had entered into a conditional share sale and purchase agreement with Tecnic for the entire issued share capital of three of the latter’s wholly-owned subsidiaries, Plastictecnic (M) Sdn Bhd (PSB), Sun Tong Seng Mould-Tech Sdn Bhd (STSM) and Bangi Plastics Sdn Bhd (BPSB).

“The proposed acquisition will allow SKP to leverage the additional production capacity of the target companies, allowing SKP Group to rejig its product mix and better tailor its services to suit the demands of customers,” said SKP.

It said the acquisition will help SKP to diversify its customer base in the automotive, oil and gas, food and beverages as well as consumer products sectors, and access multinationals such as Shell, Nestle and GlaxoSmithKline.

The issue price of 58 sen per share was arrived at on a willing buyer, willing seller basis after taking into account the price-earnings multiple of 13.4 times over the aggregate audited profit after tax of RM14.9 million of the target companies for the financial year ended Dec 31, 2013.

The aggregate original cost of investment of Tecnic in PSB, STSM and BPSB was RM13.26 million.

“Upon the completion of the proposed disposals, Tecnic will no longer have any business or operation.

“Hence, Tecnic will become a “cash company” pursuant to Practice Note 16 of the listing requirements and an affected listed issuer pursuant to Practice Note 17 of the listing requirements,” Tecnic said in a separate filing.

Tecnic and SKP are controlled by Datuk Gan Kim Huat. He controls 68.67% of Tecnic and 66.96% of SKP.

Trading in shares of SKP and Tecnic has been suspended since Sept 30. SKP shares last closed 17.36% higher at 71 sen, giving it a market capitalisation of RM639 million. Tecnic’s stock closed up 6.5% to RM5.08, with a market cap of RM205.22 million.


This article first appeared in The Edge Financial Daily, on October 3, 2014.

 

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