KUALA LUMPUR: Property and construction group Sunway Bhd is acquiring two hardware distributors — Winstar Trading Sdn Bhd and Singapore-based PND Hardware & Trading Pte Ltd — for a combined RM137.82 million.
The acquisitions are expected to be completed in three annual tranches with the final tranche completing in the second quarter of 2018.
In a filing with Bursa Malaysia yesterday, Sunway (fundamental: 1.5; valuation: 1.8) said its wholly-owned unit Sunway Holdings Sdn Bhd (SunHoldings) has signed two share sale agreements (SSAs) with Winstar vendors to acquire Winstar Trading for RM130.95 million and with PND vendors to buy PND at S$2.57 million (RM6.88 million). Under the SSAs, both the Winstar and PND vendors have guaranteed net profit of RM15 million and S$250,000 respectively per year for the financial years ending Dec 31, 2015, 2016 and 2017, in proportion to Sunway’s stake in the two companies.
In Malaysia, Winstar Trading is the sole exclusive distributor of household hardware names such as WD-40, Araldite and Esicut, and an authorised distributor of brands such as Bosch, Skil, 3M, Bahco, Cigweld, Selley, Stanley, Norton and GP Battery. Winstar Trading and PND also distribute 17 in-house brands including Nietz, Winsir, Cyber, Galaxy, Buick and StarWeld.
Sunway said the proposed acquisitions provide opportunities for its trading and manufacturing division to acquire profitable market leaders with over 30 years of experience.
“It also provides an additional revenue stream. The group anticipates synergies from cross-selling across the customer base of Sunway, Winstar Trading and PND and potential cost savings from warehousing facilities due to economies of scale.
“There is also potential for Winstar Trading and PND to supply to Sunway’s property and construction projects in the future,” it added.
This article first appeared in The Edge Financial Daily, on April 10, 2015.