Federal Furniture plans to diversify into construction

PETALING JAYA: Federal Furniture Holdings (M) Bhd proposes to diversify into construction with the acquisition of a 60% stake in Pembinaan Masteron Sdn Bhd (PMSB) for RM33 million.
The proposed acquisition is to be satisfied via a combination of RM6 million cash and an issuance of 270 million redeemable convertible preference shares at 10 sen each to the vendors, amounting to RM27 million.
PMSB has completed more than 14 projects involving residential, commercial and industrial properties. Currently, PMSB has five key projects under construction and an outstanding order book of RM355 million.
At present, Federal Furniture 's revenue is principally derived from manufacturing and trading of furniture as well as renovation and interior fit-outs, primarily for the property development and hospitality sectors.
"The group is expected to derive synergistic benefits from the proposed acquisition as the principal activities of PMSB in building construction will complement the group's current core activities.
"Such benefits will enhance the enlarged group's competitiveness in new project tendering covering both construction and IFO works, with the additional resources and project management capabilities arising from the proposed acquisition," Federal Furniture said in a stock exchange filing.
The proposals, which are conditional upon the approvals from shareholders of Federal Furniture at an EGM to be convened and Bursa Malaysia Securities, are expected to be completed in the fourth quarter of 2016.