ACE Market-listed machine design specialist, Genetec Technology Bhd, has proposed to buy 51% of CLT Engineering Sdn Bhd, a fabrication specialist, for RM26.42 million.
In an announcement to the stock exchange yesterday, Genetec said it had signed a conditional share sale agreement with one Tan Moon Teik for the acquisition of 637,000 ordinary CLT Engineering shares of RM1 each. The acquisition is to be satisfied via RM500,000 cash and the issuance of 96 million new ordinary shares of 10 sen each in Genetec at an indicative issue price of 27 sen.
Tan, 39, will emerge as the second single largest shareholder of Genetec, holding between 27.29% and 28.16% of the company, depending on the exercise of a new employees’ share option scheme (ESOS). Tan now holds a 96% stake in CLT, while Koh Toong Chuh, 33, owns 4%.
Genetec’s single largest shareholder is Atis Corporation Bhd, with a 39.41% stake comprising 96.5 million shares. Its stake will accordingly be reduced to between 27.43% and 28.31% upon the issuance of shares to Tan and depending on the extent of the exercise of the ESOS.
Genetec offers integrated engineering solutions for automation of manufacturing processes, while CLT specialises in parts fabrication and system assembly for back-end equipment in the disk drive, semiconductor, mobile phone and electronic industries.
CLT operates a range of machineries and equipment from its 43,600 sq ft fabrication facility in Bandar Bukit Puchong, Selangor. It serves a wide customer base in Malaysia, Thailand, Singapore, the US, UK and Netherlands.
The proposed acquisition comes with a net profit guarantee of not less than RM8 million and not less than RM10 million for CLT for its financial years ending Dec 31, 2010 and 2011, respectively. Tan will deposit 40 million shares issued by Genetec as security for the guaranteed profits.
In a statement, Genetec managing director KW Chin said: “This acquisition will further strengthen our presence in the hard disk drive (HDD) industry.
With the combination of our expertise and network, we are confident of securing a larger slice in the HDD market, while expanding our capabilities into other industries namely semiconductor, electrical and electronics, and biotech.”
For its financial year ended Dec 31, 2009, CLT posted a net profit of RM3.76 million on the back of RM60.19 million revenue versus RM410,000 and RM30.32 million in the previous year respectively.
For its financial year ended March 31, 2010, Genetec’s unaudited net profit was almost halved to RM4.41 million from RM8.46 million in the previous year, though revenue rose 7% to RM52.5 million from RM48.9 million. Basic earnings per share fell to 3.65 sen from seven sen previously.
For the quarter to March 31, 2010, net profit more than doubled to RM2.64 million from RM1.08 million a year earlier due to an improvement in margin resulting from stronger demand from the hard disk drive and semiconductor industries, and recognition of a foreign exchange gain.
As at March 31, 2010, its net assets per share stood at 27 sen.
Written by Loong Tse Min
This article appeared in The Edge Financial Daily, July 6, 2010.
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