Ancom to buy remaining stake in Nylex for RM97m

TheEdge Thu, Apr 29, 2021 12:54am - 2 years View Original


KUALA LUMPUR (April 28): Ancom Bhd has proposed to acquire all the assets and liabilities of Nylex (Malaysia) Bhd for RM179.3 million.

It has submitted a formal offer to the board of Nylex on the matter, the agricultural and industrial chemicals manufacturer said in a statement today, confirming a report by theedgemarkets.com earlier in the day.

"As Ancom currently holds approximately 50.3% in Nylex, this will be set off against its entitlement under the proposed distribution.

"Accordingly the net consideration for the proposed acquisition payable by Ancom will be RM96.7 million (net purchase consideration), which is for the remaining 49.7% stake it does not currently own," said Ancom

Ancom said the net purchase consideration will be satisfied via payment of RM50 million in cash, with the balance RM46.7 million fulfilled through the issuance of 31.1 million new shares at RM1.50 a share (consideration shares).

"Subsequent to the proposed acquisition, Nylex will retain RM15 million cash in the company. The balance RM81.7 million will be distributed to all shareholders of Nylex (other than Ancom) via a capital reduction and repayment exercise of RM35 million cash distribution and RM46.7 million via the consideration shares," it added.

Ancom said that upon completion of the acquisition and distribution, Nylex will be classified as a cash company with no core business.

Accordingly, Nylex will be required to submit a proposal to the Securities Commission Malaysia for its approval to acquire a new core business within 12 months from the date of being classified as a cash company.

Ancom chief executive officer Lee Cheun Wei said this is a win-win proposal for both Ancom and Nylex shareholders.

“Having full control of Nylex’s business in the industrial chemicals, polymer and chemical logistics divisions would provide us more flexibility on the execution of our overall strategies.

“Moreover, with Ancom and Nylex housed under one roof, we will enjoy greater economies of scale and synergies. With the completion of the exercise, Ancom will become one of the most integrated Agri and Industrial chemical players in the region,” Lee said.

"From the shareholders’ perspective, the proposed exercise enables Ancom’s shareholders to realize the full profitability from the industrial chemical business. On the other hand, Nylex’s shareholders would get to receive some cash distribution whilst also participating in the fast-growing agricultural chemical business, while continuing to have interest in the industrial chemical business.

“The consolidation exercise shall also see a stronger combined balance sheet for the enlarged group. With the continuous growth demonstrated so far, and recovery of the industrial chemical industry, coupled with the combined valuation of the two businesses in full, we hope we can achieve our aspiration of having RM1 billion market capitalization in the near future," added Lee. concluded.

Both Ancom and Nylex have a common shareholder, Datuk Siew Ka Wei. He owned an indirect interest of 53.77% and a direct interest of 1.98% in Nylex as at Dec 18, 2020.

In Ancom, Siew held a direct stake of 12.18% and an indirect stake of 9.54% as at April 22 this year.

Following the completion of the acquisition and distribution, Siew’s stakes in Ancom are expected to decrease slightly, to a direct stake of 11.23% and an indirect stake of 9.25%.

Prior to today’s trading suspension, Ancom’s latest closing share price stood at RM1.68, giving it a market capitalisation of RM426 million, while Nylex’s latest closing share price was 90.5 sen, valuing the company at RM175 million.

Read also:
Ancom proposes to buy up remaining Nylex stake, confirms The Edge report

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






Related Stocks

ANCOMNY 1.000
NYLEX 0.240

Comments

Login to comment.