KUALA LUMPUR: Straits Inter Logistics Bhd
has entered a heads of agreement to acquire 1.44 million shares or 38% equity interest in Banle International Ltd from CBL (Asia) Ltd in a RM14.99mil share deal.
In a filing with the stock exchange, Straits said the purchase consideration will be fully satisfied via the issuance and allotment of 63.82 million Straits shares at an issue price of 23.5 sen per share.
The issue price is based on a discount of 3.6% to the five-day volume weighted average market price (VWAP) of Straits shares up to Nov 8. It also represents a one sen or 4.1% discount to the last transacted price of 24.5 sen.
Straits' earnings per share stood at about 69 sen in the financial year ended Dec 31, 2017.
For its 38% share of equity in Banle, Straits would be given a profit guarantee of US$313,500 (RM1.3mil) for each of two financial years ending Dec 31, 2019, and Dec 31, 2020, respectively.
Based on this profit guarantee, the RM14.99mil purchase consideration represents a price-earnings multiple of 11.5 times.
According to the filing, the acquisition is to facilitate the geographical expansion of Straits' business operations into Hong Kong as well as to tap into Banle's sales and marketing network in the market.
Straits added that it has a favourable outlook on Hong Kong's oil bunkering industry given the local government's support and initiatives to promote the sector to international markets.
"The Proposed Acquisition is also expected to provide Straits Group an additional income stream in the form of share of profit from Banle, which will become an associate company of Straits Group post-completion of the Proposed Acquisition," it said.
Hong Kong-based Banle is principally involved in the trading of bunker oil and the provision of marketing services, and is wholly owned by CBL.
"Presently, its customers’ base include transportation companies and shipping companies from amongst others, Germany, Taiwan, China and Singapore," said the filing.
Banle's revenue for its financial year ended July 31, 2017, was US$84.84mil, representing a jump of 137.9% over its revenue of US$35.66mil in the previous year. Also in FY2017, profit after tax rose 50.9% from US$241.99mil to US$365.24mil.
The company's financial year-end will be moved from July to December following the closing of the account for the year ended July 31, 2018.