MACHINE design specialist Genetec Technology Bhd (0104) has signed a conditional deal to take control of machine parts maker CLT Engineering Sdn Bhd for RM26.42 million to expand.
"With the combination of our expertise and network, we are confident of securing a larger slice of the HDD (hard disk drive) market while expanding our capabilities into other industries, namely semiconductor, electrical and electronics and biotech," Genetec managing director Chin Kem Weng said in a statement.
Genetec will pay RM500,000 in cash and the rest in 96 million new shares priced at 27 sen apiece. Shares of Genetec closed at 31.5 sen yesterday. It is buying CLT from chief executive and founder Tan Moon Teik.
This means that Tan will end up as a major shareholder of Genetec if the deal goes through. He will hold as much as 28.16 per cent, making him the second biggest shareholder, after Chen Khai Voon whose stake will fall to 28.31 per cent.
Chen currently holds 39.41 per cent of Genetec through Atis Corp Bhd, followed by Chin with 21.32 per cent.
Under the deal, Tan will also guarantee that CLT will make a profit after tax of at least RM8 million in the financial year to December 31 2010 and at least RM10 million in 2011.
He will secure the guarantee by setting aside 40 million Genetec shares issued to him. If CLT does better than the guarantee, Tan will get a special performance incentive.
Last year, CLT made a profit after tax of RM3.76 million on revenue of RM60.19 million. Genetec's profit after tax was RM4.4 million on the back of RM52.5 million revenue.
The deal, which is expected to be completed by end-Septembe, will need to be approved by shareholders of Genetec.
Genetec is also proposing to issue new share options, which will make up 15 per cent of its outstanding shares, to reward employees.
- by Business Times
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