SKP-Tecnic merger on the cards?

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KUALA LUMPUR: Plastic parts maker SKP Resources Bhd is expected to reveal a plan for a takeover of its smaller rival, Tecnic Group Bhd, today, sources have told The Edge Financial Daily. Both Tecnic and SKP Resources are controlled by Datuk Gan Kim Huat. He controls 68.67% of Tecnic and 66.96% of SKP Resources, according to the companies’ latest shareholding filings.

Tecnic manufactures plastics parts for industries such as automotive, electrical and electronics, industrial packaging and consumer packaging.

SKP, which is a bigger entity, is also in a similar business, making plastic parts and components, as well as sub-assembly of electronic and electrical equipment. Trading in both counters was suspended near to market close yesterday, pending a material announcement. Sources said SKP  — with a market capitalisation of RM625.5 million — will acquire the remaining shares it does not  own in Tecnic, which will be paid in a combination of cash and shares.

Gan, who is executive chairman of both companies, controls 66.96% of SKP with direct interest of 17.45% and deemed interest of 49.51%. Gan also controls some 68.67% of Tecnic with 29.96% direct interest and 38.71% deemed interest.

As at June 30, SKP’s net cash stood at RM19.4 million with zero borrowings, while Tecnic has net cash of RM25.7 million. SKP Resources’ share price doubled from 35 sen a year ago to close at 71 sen yesterday before being suspended. Tecnic rose 31 sen or 6.5% to settle at RM5.08 yesterday, also a five-year high. It has risen about 66% from RM3.05 a year ago.

This article first appeared in The Edge Financial Daily, on September 30, 2014.