KUALA LUMPUR (Oct 22): Marble and granite products trader Stone Master Corp Bhd has entered into a heads of agreement (HoA) to acquire YNL Properties Sdn Bhd (YNL Prop), the owner of a piece of land measuring 305.6 sq m with an 11½-storey office building on it in Jalan Raja Chulan here, for RM15 million.

The consideration is more than half the market capitalisation of the group, which stands at RM22.03 million according to the last transacted price of its shares at the close of trading hours today of 24.5 sen, down 0.5 sen or 2% from yesterday's close.

It signed the HoA for the proposed acquisition of the entire equity stake in YNL Prop with its vendors Lai Yeng Fock, Ng Sing Huat and He Min-Er, today.

In its filing to Bursa Malaysia, Stone Master said the primary objective of the proposed acquisition is to house its existing corporate and head offices, and/or showrooms, if necessary and deemed fit, in the said office building.

"The board has also accounted for the current rental payment (ie expenses incurred) to the landlord of its existing office premise, which may escalate over time. At present, the rented premises of Stone Master comprises a four-storey commercial shoplot office building entailing rental payable to the existing landlord.

"The said property will not only be used to continue its existing business operation but it will enable the company to have a permanent premises of its own for its further expansion plans, which definitely will contribute positively to the future earnings of the company and its group as a whole," said Stone Master.

Stone Master said the HoA will form the framework for future negotiations, which the parties anticipate to culminate within 30 days in a definitive agreement in the form of a share sale agreement (SSA).

The acquisition of YNL Prop will be subject to approvals from the Securities Commission Malaysia, Bursa Malaysia, Stone Master's shareholders and the results of a due diligence exercise — to be carried out and completed within two months from the date of the SSA.

(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.)