Ge-Shen acquires 60% stakes in ARD and ATSCM for RM13.5mil cash

KUALA LUMPUR: Ge-Shen Corp Bhd has entered a non-binding term sheet to acquire 60% stakes each in Amity Research & Development Sdn Bhd (ARD) and Amity Technical Services & Consultancy (M) Sdn Bhd (ATSCM) for RM13.5mil cash.

ARD is an engineering and consultancy services provider in the E&E industry while ATSCM is a manufacturer specialises in printed circuit board assembly (PCBA),

“The said acquisitions will incur a cost of RM13.5mil for the company, which will be entirely funded through internally generated funds and bank borrowings,” Ge-Shen said in a statement.

Upon completion of the proposed acquisitions, Ge-Shen said the target companies become 60.0% owned subsidiaries of the company.

The proposed acquisition involved purchasing 60,000 shares of ARD and 300,000 shares of ATSCM from the existing shareholders, Pak Yue Leong, Tan Chung Ken, Tan Guan Lai, Tan Khay Leang, Tan Kooi Loon, and Teh Sheh Chien.

Upon signing the term sheet, the company is expected to execute the share sales agreement within 60 days, with full payment to be completed within three months following the execution of the agreement.

Ge-Shen said the purchase justification is based on a price-to-earnings ratio of 4.5 times derived from a minimum net profit of RM3.0mil per year for the targeted companies, totalling RM6mil for the guaranteed period of the financial year ending Dec 31, 2024, and 2025.

“This proposed acquisition will expand Ge-Shen’s scale of operations and facilitate the group’s presence in such a market. It is also in line with the group’s objective of acquiring strategic stakes in companies involved in high value-added industries with potential for future growth,” it said.

Ge-Shen closed up 78 sen, or 24.3% to RM 3.99, giving it a market capitalisation of RM490mil. Year-to-date, the counter has risen by 244%.

Separately, Bursa Malaysia Securities Bhd has issued an unusual market activity (UMA) query to Ge-Shen on the sharp rise of the company’s share price.

Investors are advised to take note of the company’s reply to the above UMA query, which will be posted on Bursa’s website when making their investment decision, according to the stock exchange.