Power Root to increase stake in subsidiary to 91% from 77%

03 Oct 2016 / 05:40 H.

    PETALING JAYA: Power Root Bhd has proposed to increase its stake in its subsidiary company Power Root ME FZCO (PRMF) from 77% to 91% for RM49.6 million, through the issuance of 24.2 million new shares of RM2.05 a share.
    In a filing with Bursa Malaysia last Friday, Power Root said it entered into a conditional share agreement with Wong Tak Keong (vendor) for the proposed acquisition of seven ordinary shares of UAE Dirham 100,000 each in PRMF representing 14% of the equity interest in PRMF.
    “The proposed acquisition will allow Power Root to increase its equity interest in PRMF from 77% to 91%, thereby allowing Power Root Group to consolidate the earnings attributable to the sale shares. In addition, the proposed acquisition is not expected to expose Power Root to new business and operational risks as PRMF is an existing subsidiary of Power Root,” it said.
    Incorporated in Jebel Ali Free Zone in February 2012, PRMF was a result of the group’s strategy to expand its operations to the UAE and expand the distribution network of the group.
    Over the years, about a quarter of the group’s revenue has been contributed by PRMF due to distribution of various beverage products in the UAE.
    The revenue recorded by PRMF for the financial year ended March 31, 2016 (FY16) and the 13-months financial period ended March 31, 2015 represent 28.6% and 28.5% of the group’s total revenue for the respective financial years.
    The company said that the issuance of consideration shares will lessen the cash outlay of Power Root Group for the proposed acquisition, which Power Root Group may otherwise channel towards its operations and other working capital requirements.
    The deal is expected to be completed by the fourth quarter of 2016, pending approval from Bursa Securities.
    RHB Investment Bank Bhd is adviser for the proposed acquisition.


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