PETALING JAYA: Ta Win Holdings Bhd has proposed to acquire a 51% stake in Sin Line Tek Electronic Co Sdn Bhd via a share sale agreement and a subscription agreement for a total purchase consideration of RM20.7 million, in a move to add value to its copper rod and wire products and further extend its existing product range downstream.
According to its Bursa Malaysia filing, the share sale agreement will see the acquisition of 1.75 million shares of Sin Line Tek from Lim Aik Gee, representing a 30% stake, for RM12.2 million which will be satisfied via a combination of the issuance of 80 million consideration shares at 10 sen per share for a total of RM8 million, the remaining RM4.2 million satisfied in cash.
The exercise also includes a proposed subscription agreement involving the subscription of 1.22 million subscription shares, representing approximately 21% of the enlarged issued share capital of Sin Line Tek after the completion of the proposed investment, for a total subscription amount of RM8.5 million.
The purchase consideration under the proposed acquisition, which is equivalent to approximately RM32 million for a 100% equity interest in Sin Line Tek, represents a discount of approximately 10.8% to the median valuation of Sin Line Tek of RM35.89 million, as opined by independent financial adviser FHMH Corporate Advisory Sdn Bhd.
Ta Win revealed that the vendor has guaranteed that Sin Line Tek will achieve a profit after tax (PAT) of RM2.6 million and RM3 million for the first profit guarantee period and second profit guarantee period, respectively.
Ta Win executive director Tan Poo Chuan said the proposed acquisition is part of its strategic thrust to strengthen its core business by leveraging on viable prospects in the E&E industry.
“As demand for E&E products continues to grow locally and globally, we view this as a synergistic opportunity for the group to integrate our existing business in the manufacturing of copper products, with the downstream business operations of Sin Line Tek.
“We also expect synergistic benefits between Ta Win and Sin Line Tek by ensuring long-term security and undisrupted supply of copper wire and rods at favourable pricing and terms for Sin Line Tek, enhancing the efficiency of cable, wire harness and AC & DC power cords manufacturing processes,” he said
The group’s financial performance is also expected to benefit from the profit guarantee.
The proposed investment is expected to be completed by the fourth quarter of the year.