MClean to diversify to include surface finishing

PETALING JAYA: MClean Technologies Bhd will seeks shareholder's approval to diversify its business to include the provision of surface finishing of metal and non-metal parts for electrical and electronic (E&E) industries as well as other industries, via the acquisition of a 55% stake in DWZ Industries Sdn Bhd, for RM14.09 million.
MClean will pay for the stake by issuing 56.38 million new ordinary shares of 25 sen each in MClean.
The MClean group's existing principal activities are the provision of precision cleaning, washing, assembly services as well as other related services for the hard disk drive (HDD) and semiconductor industries.
DWZ 's activities are considered to be upstream to the MClean group's existing principal activities in the value chain of the E&E industries.
"Considering the overview and outlook of surface treatment industry in Malaysia, the global E&E market and global HDD market, as well as the future prospects of the DWZ group, the board has identified the proposed acquisition as a viable new business opportunity for the MClean group to diversify its revenue and earnings base to reduce its dependency on its existing business and to create value through the proposed acquisition," MClean said in a filing with the stock exchange.
The MClean group believes that the diversification into surface finishing business is expected to have stable and strong growth prospects and will be beneficial to the MClean Group's future earnings.
"The board expects the proposed acquisition to result in additional contribution of at least 25% to the future net profits of the enlarged MClean group."
It is also proposing free warrants issue of up to 42.26 million warrants on the basis of six new warrants.
The proposals are expected to be completed in the third quarter of 2015, subject to approvals from Bursa Securities and shareholders at an EGM to be convened.