GE-SHEN ACQUIRES 60 PCT STAKES IN ARD, ATSCM FOR RM13.5 MLN

KUALA LUMPUR, March 18 (Bernama) -- Ge-Shen Corporation Bhd has entered into a non-binding term sheet to acquire 60 per cent stakes each in Amity Research & Development Sdn Bhd (ARD) and Amity Technical Services & Consultancy (M) Sdn Bhd (ATSCM) for RM13.5 million.

ARD is an engineering and consultancy services provider in the electric and electronics (E&E) industry, while ATSCM is a manufacturer that specialises in printed circuit board assembly, product box building, and cable and wire assembly.

In a filing with Bursa Malaysia, Ge-Shen said the acquisitions will incur a cost of RM13.5 million which will be entirely funded through internally generated funds and bank borrowings.

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The proposed acquisition involved purchasing 60,000 shares of ARD and 300,000 shares of ATSCM from the existing shareholders Pak Yue Leong, Tan Chung Ken, Tan Guan Lai, Tan Khay Leang, Tan Kooi Loon and Teh Sheh Chien.

“Upon signing the term sheet, the company is expected to execute the share sales agreement within 60 days, with full payment to be completed within three months following the execution of the agreement,” it said.

The acquisition is expected to be completed by the third quarter of 2024.

Ge-Shen said the purchase justification is based on a price-to-earnings ratio of 4.5 times derived from a minimum profit after tax of RM3.0 million per year for the targeted companies, totalling RM6 million for the guaranteed period of the financial year ending Dec 31, 2024 and 2025.

“This proposed acquisition will expand Ge-Shen’s scale of operations and facilitate the group’s presence in such a market. It is also in line with the group’s objective of acquiring strategic stakes in companies involved in high value-added industries with potential for future growth,” it said.

On March 12, Ge-Shen announced its decision to sell its entire 70 per cent stake in Demand Options Sdn Bhd for RM15 million, aiming to streamline operations by divesting the loss-making subsidiary.

Additionally, as part of its diversification strategy, Ge-Shen proposed acquiring a 40 per cent stake in Local Assembly Sdn Bhd.

Ge-Shen share price closed at RM3.99 today on Bursa Malaysia, up by 78 sen or 24.3 per cent, giving it a market capitalisation of RM490 million. Year to date, the counter has risen by 244 per cent.

-- BERNAMA