Favelle Favco Bhd's crane
KUALA LUMPUR: Favelle Favco Bhd
plans to acquire controlling stakes in four engineering firms with businesses in the oil and gas sector for an indicative initial price of RM87.4mil.
In a filing with Bursa Malaysia, the crane manufacturing, trading and rental firm said it had inked a heads of agreement (HoA) with a group of individuals to buy 70% equity interest in Exact Automation Sdn Bhd, Sedia Teguh Sdn Bhd, Exact Analytical Sdn Bhd and Exact Oil & Gas Sdn Bhd.
The target companies made a combined profit after tax of RM15.3mil for the financial year ended Dec 31, 2016 (FY16).
In addition to the price of RM87.4mil, Favelle Favco may pay an incremental purchase consideration over FY17 to FY19 if the target companies achieve certain cumulative profit thresholds (to be determined later) for the three financial years.
Under the HoA, all parties involved have agreed to negotiate exclusively for at least three months before a more concrete share sale agreement is signed.
Favelle Favco said the final price would be decided after a due diligence review of the target firms.
“The board believes that this proposed acquisition of the target companies will enhance and widen the earnings base of the Favco group,” it said.
“The Favco group’s international network will also provide synergies to the future business growth of the target companies,” it added.
