KUALA LUMPUR (Aug 13): Wah Seong Corp Bhd is disposing of a 70% stake in Spirolite (M) Sdn Bhd (SPRL) to Lesso M Holdings Sdn Bhd for RM30.37 million cash, to collaborate with the latter in the pipeline manufacturing business.

SPRL is a wholly-owned unit of Syn Tai Hung Trading Sdn Bhd, which is a wholly-owned unit of Wah Seong.

Under the deal, Wah Seong will keep the remaining 30% in SPRL, but there is a put option to sell the remaining stake to Lesso.

"The rationale is to collaborate with Lesso who is the current market leader that possesses state-of-the-art technology in the pipeline manufacturing business and wide international network which is capable of elevating the business to the next level," said Wah Seong.

"The proposed disposal also signifies divestment of non-core businesses within Wah Seong and to streamline the group's business operations," it added.

Proceeds from the sale will be used to acquire other pipe manufacturing assets and expansion of its production, repay borrowings and working capital, Wah Seong said.

The original investment in SPRL totalled RM17.19 million, it said, adding that the one-off gain of disposal is approximately RM12.7 million and will add 1.65 sen to its earnings per share.

Shares in Wah Seong closed half a sen or 0.97% lower at 51 sen, valuing the group at RM391.39 million.