KUALA LUMPUR: Kumpulan Perangsang Selangor Bhd (KPS) expects to enhance its future profitability on an enlarged earnings base with the acquisition of a 100 per cent equity stake in MDS Advance Sdn Bhd via its wholly-owned subsidiary, Perangsang Dinamik Sdn Bhd, for RM85 million.
The purchase consideration of RM85 million values MDS Advance within the industry benchmark in terms of enterprise value/earnings before interest, tax, depreciation and amortisation (EV/EBITDA) ratio of 7.9 times, which will be fully satisfied by internally generated funds, KPS said in a filing with Bursa Malaysia today.
Managing director/group chief executive officer, Ahmad Fariz Hassan said the acquisition will complement Perangsang Dinamik’s current portfolio, consisting of Toyoplas Manufacturing Sdn Bhd and CPI Sdn Bhd, strategically positioning it by adding to the existing range of expertise in plastic injection moulding and electronic manufacturing services with knowhow in metal machining.
"With a widened array of capabilities adding to its existing competitive advantage and value proposition, Perangsang Dinamik could offer more holistic solutions to the engineering support industry, and ultimately, the machinery and equipment industry, having even broader skillsets than some of the larger players in the industry.
"The acquisition is also consistent with KPS’ long-term business strategy of enhancing the group’s fundamentals by pursuing opportunities that would take us further on the trajectory of sustainable growth and continuous value creation,” he said.
Ahmad Faris said the expected higher market share would give KPS more strategic positioning relative to its peers.
"As this acquisition would further strengthen our core manufacturing business with the platform to move towards higher margin products, it is expected to contribute towards shaping a more robust group’s financial performance with broader earnings base and visibility, and ultimately, enhance shareholder value,” he said. - Bernama