is acquiring 30% equity in its competitor GB Plas Sdn Bhd for RM15mil.In a press release on Wednesday, Asia Poly said it had entered into a heads of agreement with GB Plas managing director and largest shareholder, Gooi Chin Hooi, who owns 65% equity.
Following the completion of the proposed acquisition, which is likely to be completed by the first quarter of 2021, GB Plas will be an associate of Asia Poly.
AS such, GB Plas is expected to contribute positively to Asia Poly’s earnings for the financial year ended FY2021 onwards.
The proposed acquisition will be funded via internally generated funds.
Asia Poly executive chairman Datuk Yeo Boon Leong said the acquisition will enable both parties to strengthen each other’s presence in each party’s respective key markets.
GB Plas is active in Southeast Asia, while Asia Poly has tapped further into the US and Europe markets.
“The synergistic relationship between these two companies will also be explored in regards to research and development (R&D) for the usage of acrylic sheets and plastic sheets in other applications, such as solar panels.
“Furthermore, given that Asia Poly’s production lines are currently running at full capacity, the acquisition shall provide an immediate expansion opportunity as GB Plas’ plant is currently running at a utilisation rate of between 50% to 60%.
“This boosts our initial plan of doubling up our production capacity to 1,600 tonnes per month by September 2021,” said Yeo.
GB Plas registered a total revenue of RM65.8mil and RM52.2mil for the financial years 2018 and 2019, respectively.
GB Plas managing director Gooi Chin Hooi noted that the company is in the advanced stage of discussion for a large long-term contract from a US customer.
“We see a rising demand for extruded acrylic and plastic sheets in Asia, the US and European markets.
“GB Plas will be able to tap into these markets even more efficiently through the market channels provided by Asia Poly.
“Just like cast acrylic sheets, we have seen a sharp spike in orders from new customers this year, thus it is important that we capture these market opportunities by having a larger combined presence through this corporate exercise,” he said.
Asia Poly is the only listed Malaysian manufacturer of cast acrylic sheets.
Cast acrylic sheets are used widely in sanitary wares, signage & displays, architectural designs, interior design, as well as automotive and transportation.
Other applications include food, medical, industrial equipment and sports.