Win-win strategy in PUC takeover

KUALA LUMPUR: The completion of the reverse takeover (RTO) of ACE Market-listed PUC Founder (MSC) Bhd by London’s AIM Market-listed Resource Holding Management Ltd will enable both companies to leverage on each other’s strengths and core competencies.

The RTO will be completed today with the listing of the 750 million new PUC Founder shares issued to Resource Holding – a process that took more than three years after it was first initiated in November 2010.

Resource Holding group managing director Cheong Chia Chieh told StarBiz the acquisition would enhance the income sources and improved financial performance of the enlarged PUC Founder Group.

He said this would arise from consolidation of additional earnings from the Malaysian-owned Resource Holding’s core business primarily involving in media brokerage services and financial related services.

PUC Founder will continue with its core businesses to supply biometrics security products and provide electronic publishing system and management information system business to publishers.

Cheong expects PUC Founder’s business to complement the former’s media brokerage business where it provides services to its customers’ advertising needs in print, television, radio, billboards and digital media.

To recap, the corporate exercise involved Resource Holding injecting the core business of its unit, Red Media Asia Ltd Group (RMA Group), into PUC Founder for a purchase consideration of RM90mil.

This saw the issuance of 750 million new PUC Founder shares at 12 sen each to Resource Holding as the purchase consideration for acquisition of the whole RMA Group.

“PUC Founder’s share prices trading at prevailing market price of 24 sen per share is indirectly a reflection of improved fundamentals and enhanced earnings base of the enlarged group moving forward,” he said.

Resource Holding now owns 60.73% of PUC Founder. Both companies will continue to be listed on both stock exchanges which are at different parts of the world .

Cheong sees organic growth for PUC Founder’s existing biometrics security, electronics publishing, management information system solution business and RMA Group’s existing media, technology-based distribution of merchandise and finance services business moving forward.

The exercise would enable the enlarged group to establish and develop a business ecosystem which shall include the introduction of social media shop, e-content and e-payment related new businessthrough possible merger and acquisition and/or joint venture strategy in the future.

He said both companies could also leverage on PUC Founder’s ties with China’s Founder Group – which was the single largest shareholder of PUC Founder (before the RTO) exercise to expand their business territories into Greater China markets.

Cheong said there could be potential advertising income due to the Founder Group’s position as the second largest IT manufacturer and one of China’s largest healthcare and pharmaceutical enterprises.

There would also be media network penetration via the Founder Group’s network as a supplier of Chinese printing and publishing systems which represents 85% of China’s domestic market and 90% of the international market.

Other growth business opportunities for the company’s AxChange business is via PUC Founder’s business in IT manufacturing, IT manufacturing, IT services, data operations and healthcare and pharmaceuticals.

“The completion of RTO exercise beside will help to enhance the income source and improve the financial performance of the enlarged PUC Founder Group; it also allows PUC Founder to tap into the financial resources and competitive strengths of the RMA Group to enhance PUC Founder financial and operational capabilities,’’ said Cheong.