KUALA LUMPUR: Southern Steel Bhd
has signed a heads of agreement (HOA) with Ann Joo Resources Bhd to explore the proposed acquisition of 100% equity interest in Ann Joo Steel Bhd (AJSB).
In a filing with Bursa Malaysia, the steel manufacturer said the proposed acquisition involves 612.99 million ordinary shares in AJSB, representing its entire issued share capital, subject to the terms and conditions of a definitive share purchase agreement (SPA) to be agreed.
Both parties have agreed to negotiate and enter into the SPA within 60 days from the date of the HOA or any extended period mutually agreed.
The proposed acquisition will include AJSB’s core steel operations and its wholly-owned subsidiary, Ann Joo Integrated Steel Sdn Bhd, while excluding certain assets and dormant subsidiaries.
Southern Steel said the HOA serves as a framework to facilitate negotiations between the parties, with the proposed acquisition in line with its strategy to strengthen its position in the upstream steel manufacturing sector.
“The proposed acquisition is in line with the group’s strategy to strengthen its position in the upstream steel manufacturing sector,” it said.
“As both the group and AJSB are principally involved in similar upstream steel manufacturing operations, the proposed acquisition is expected to enhance the group’s operational scale, improve efficiencies through the optimisation of production capacity, procurement and manufacturing resources as well as create opportunities for operational and cost synergies,” it added.
The purchase consideration will be determined based on a base value of RM1.005bil for non-current assets, together with adjustments for current assets, total liabilities and agreed expenses.
The proposed deal is subject to the execution of the SPA, as well as approvals from shareholders of both Southern Steel and Ann Joo Resources, and any relevant regulatory authorities.
