KPS proposes to acquire Century Bond
Last updated on 12 August 2016 - 04:05pm
PETALING JAYA: Kumpulan Perangsang Selangor Bhd (KPS) proposes to acquire 71.44% equity interest in packaging solutions provider Century Bond Bhd (CBB) for RM150 million.
KPS and its wholly owned subsidiary Perangsang Packaging Sdn Bhd (PPSB) entered into a conditional share sale agreement with CB Equities Sdn Bhd (CBE) and its affiliates for the proposed acquisition of 85.7 million ordinary shares of 50 sen each in CBB at RM1.75 per share.
In a filing with Bursa Malaysia yesterday, KPS said PPSB will be obliged to extend a mandatory general offer (MGO) for all remaining CBB shares for RM1.75 per share upon completion of the proposed acquisition.
KPS believes that the proposed acquisition will fit into its business strategy in the long-term and create value for its stakeholders. The proposals are expected to provide KPS with an additional revenue stream.
It said that CBB is a market leader in Malaysia’s cement packaging segment with growth opportunities in adjacent markets. It is also a profitable and cash generating business generating consistent net profit of over RM15 million each year from FY12 till FY16.
“We are extremely pleased to mark our third proposed acquisition of the year by welcoming CBB into the KPS group. Currently, CBB supplies its cement bag products to all the biggest players in the cement industry domestically, commanding a 60% share of the market according to a recent research report by Public Investment Bank Bhd.
“As the market leader in cement packaging in Malaysia as well as having a presence in Thailand, Indonesia and Singapore, it is an exciting addition to our portfolio of new businesses,” KPS CEO Ahmad Fariz Hassan said in a statement yesterday.
Fariz said CBB has shown steady financial performance with healthy margins and cash reserves, and thus has the ability to pay out dividends.
Upon completion of the proposed MGO, if the acceptance level of the proposed MGO results in PPSB holding 75% or more of CBB shares, PPSB does not intend to maintain the listing status of CBB on the Main Market of Bursa Securities.
Both proposals will be funded entirely in cash, via a combination of external borrowings (RM170 million) and internally generated funds (RM40 million).
The proposals are subject to the approval of KPS shareholders at an EGM to be convened and are expected to be completed by end of the first quarter of 2017. CIMB Investment Bank Bhd has been appointed as the principal adviser to KPS for the proposals.