KUALA LUMPUR (March 29): Sunway Bhd is acquiring Blacktop Industries Sdn Bhd, which will allow the group's quarry division to penetrate into new markets by wider market coverage and additional capacity.
Blacktop is in the business of production and selling of quarry aggregates and asphalt premix, as well as renting of mobile equipment. It also holds a 50% equity interest in both Blacktop Lanchang Sdn Bhd and Can Technical Services Sdn Bhd, as well as a 49% stake in TKM Sdn Bhd.
In a filing with Bursa Malaysia today, Sunway said its wholly-owned subsidiary Sunway Holdings Sdn Bhd has entered into a share sale agreement (SSA) with Datin Seri Lau Lai San, Chu Yuen Leng and Chu Yuen Mun to acquire 1 million shares or a 100% stake in Blacktop Industries Sdn Bhd for RM70.09 million. Lau, Yuen Leng and Yuen Mun hold 40%, 41% and 19% shareholding respectively in Blacktop.
Sunway said the proposed acquisition will improve both market share and financial performance of its quarry division via penetration into new markets.
The increased coverage will result in greater cost efficiency through economies of scale, it added.
According to Sunway, the proposed acquisition will be carried out in two tranches where Sunway Holdings will first acquire a 60% stake in Blacktop for RM42.05 million, followed by another tranche involving the remaining 40% stake in Blacktop for RM28.04 million.
The proposed acquisition will be satisfied by internal funds.
Sunway expects to complete the entire transaction by the second quarter of 2020.
"The proposed acquisition is not expected to have any immediate material effect on the group's earnings per share, net assets per share and gearing for the financial year ending Dec 31, 2019. However, the proposed acquisition is expected to contribute positively to the future earnings of Sunway Group," it said.
Sunway shares closed down one sen or 0.59% to RM1.68 today, for a market capitalisation of RM8.14 billion.