Favelle Favco to invest in four firms

PETALING JAYA: Favelle Favco Bhd today entered into a heads of agreement with a group of individual vendors to acquire a 70% stake each in four target companies.

The four companies are Exact Automation Sdn Bhd, Sedia Teguh Sdn Bhd, Exact Analytical Sdn Bhd, and Exact Oil & Gas Sdn Bhd.

It said the purchase consideration comprises the initial purchase consideration and the incremental purchase consideration.

The basis of computation of the initial purchase consideration is eight times of the adjusted profit after tax for FY16, which will be determined by the parties after completion of a satisfactory due diligence review on each of the target companies prior to the execution of the sale and purchase agreement (SPA).

“Assuming an indicative adjusted profit after tax of RM15.61 million, the indicative initial purchase consideration shall be RM87.4 million,” it said in a stock exchange filing.

The final incremental purchase consideration will be determined after completion of a satisfactory due diligence review prior to the execution of the SPA. Favelle Favco is of the opinion that the proposed acquisition is in the best interest of the company.

“The board believes that this proposed acquisition of the target companies will enhance and widen the earnings base of the Favco group. The group’s international network will also provide synergies to the future business growth of the target companies,” it said.

Favelle Favco closed unchanged at RM2.62 today with 37,300 shares traded.