KUALA LUMPUR (March 10): Pecca Group Bhd, through its wholly-owned subsidiary Pecca Leather Sdn Bhd, has entered into a shares transfer agreement on March 8 for the acquisition of an 80% equity interest in PT Gemilang Maju Kencana (GMK).

The price tag of the acquisition is Indonesian rupiah 6.4 billion or approximately RM1.88 million, which will be fully satisfied by cash via internal funding.

GMK, similar to Pecca, is also involved in the business of upholstery leather wrapping and seat covers for the automotive industry in Indonesia.

The company is currently jointly-owned by West Java-based carton box trading firm PT Multi Berjaya Asindo (61%), Selangor-based car interior accessories maker CSC Automotive Sdn Bhd (22%), Tan Kim Cheang (16%) and Herny Pramana (1%).

Under the deal, Pecca will become the controlling shareholder of GMK with an 80% stake, whereas Herny and Neo Hwee Leong will take up a 10% stake each.

Herny, a 51-year-old Indonesian woman, is currently a minority shareholder and the head of the finance department of GMK. She will be raising her stake in the company from 1% to 10%.

Neo, a 36-year-old Malaysian, joined GMK as an operational manager in 2017, before he was promoted to general manager in 2021.

It is worth noting that Pecca, Herny and Neo had agreed to inject additional capital into GMK for working capital.

Main Market-listed Pecca said that the acquisition enables the group to enlarge its foreign presence in the automotive industry by entering the Indonesian market.

“Pecca has the competitive advantage of securing new orders with new customers in the Indonesia market,” it said.

“The well-established market presence of GMK will help Pecca accelerate its presence in the OEM (original equipment manufacturer) automotive industry in Indonesia,” the company added.

Barring any unforeseen circumstances, the acquisition is expected to have a positive contribution on the earnings and net assets of Pecca for the financial year ending June 30, 2023.

Pecca’s share price closed 0.5 sen or 0.52% lower at 95 sen, giving its market capitalisation of RM710.68 million.