PETALING JAYA: TMK Chemical Bhd
has proposed to acquire Chemical Company of Malaysia Bhd (CCM) from Batu Kawan Bhd in a RM920mil cash-and-shares deal that would see the plantation and industrial group emerge as a major shareholder in the listed chemicals company.
In a filing with Bursa Malaysia, TMK said it had submitted a non-binding letter of intent to acquire 100% of CCM, excluding associate company Orica-CCM Energy Systems Sdn Bhd and two parcels of land linked to that business.
The assets are to be transferred out at cost before or after completion, subject to approvals.
The proposed consideration of RM920mil will be satisfied through a combination of cash and new TMK shares.
The cash portion will be funded via proceeds from TMK’s December 2024 listing, bank borrowings and internally generated funds, while the share portion will be issued at RM1.9098 apiece, based on TMK’s five-day volume-weighted average market price as at May 31.
Upon completion, Batu Kawan is expected to hold at least a 20% stake in the enlarged TMK group, making it the company’s second-largest shareholder.
The proposed acquisition is a related- party transaction as TMK’s largest shareholder, Datuk Lee Soon Hian, is the younger brother of Batu Kawan chairman Tan Sri Lee Oi Hian.
TMK’s letter of intent noted that the transaction will require approval from non-interested shareholders and independent advisers to both parties.
In a separate statement, Batu Kawan said its board, excluding interested directors, had agreed in principle to the offer, subject to due diligence, advice from an independent adviser and the signing of a definitive sale and purchase agreement.
Notably, the proposed disposal comes about five years after Batu Kawan took CCM private.
The group previously acquired a controlling 56.32% stake in CCM from Permodalan Nasional Bhd for RM292.8mil in 2020, before completing the privatisation exercise in 2021.
CCM manufactures a range of industrial and specialty chemicals, including chlor- alkali products, sulphur derivatives and polymer coatings.
Its products are used in sectors such as water treatment, rubber, healthcare, manufacturing and agriculture.
For TMK, the deal would mark a significant expansion from its core chemical storage and logistics operations into manufacturing.
CCM’s established production base and downstream presence could provide a platform for the company to move further up the value chain.
In the meantime, the transaction also comes as Batu Kawan pursues another sizeable corporate exercise.
Earlier this month, the group acquired a 47.7% stake in MKH Bhd for RM549.8mil, triggering a mandatory general offer for the remaining shares.
Batu Kawan has indicated it intends to privatise MKH should it secure a 90% stake.
While the CCM proposal remains subject to due diligence and shareholder approvals, the planned disposal suggests Batu Kawan may be rebalancing its portfolio, monetising a mature chemicals asset while retaining exposure to the business through a sizeable stake in TMK.
The parties have agreed to an exclusivity period of two months to negotiate the transaction, with due diligence expected to be completed within one month from acceptance of the offer.
