KUALA LUMPUR (March 14): Logistics solutions provider Transocean Holdings Bhd has announced that it will acquire the entire equity interest in Taipanco Sdn Bhd for RM140 million to revitalise its business.

In a filing with Bursa Malaysia today, the group said it will issue 102 million new ordinary shares and 38 million new redeemable convertible preference shares (RCPS), both priced at RM1 each.

The group acquired Taipanco by inking a conditional sale and purchase agreement and a profit guarantee agreement with the company's shareholders and directors Jee Chau Hau, Nazari Akhbar and Nor Rahah Ab Ghani (the vendors).

The vendors will have a collective shareholding of 55.25% of the enlarged issued share capital of Transocean and 64.64% upon full conversion of the RCPS, effectively emerging as major shareholders in the company, making the deal a reverse takeover (RTO). They will also be obliged to undertake a mandatory takeover (MGO) of the company to acquire the remaining shares not held by them.

However, as it is not their intention to do so, they will seek an exemption from undertaking a MGO from the Securities Commission Malaysia.

The vendors will also grant Transocean a profit guarantee that Taipanco's profit before tax (PBT) for FY2017, FY2018 and FY2019 shall not be less than RM10 million each and that the cumulative PBT for the three financial years shall not be less than RM33 million.

"Based on the profit guarantee of not less than RM10 million audited consolidated PBT for the FY2017, the purchase consideration represents an implied price earnings ratio (PER) of 14 times," the filing said.

"However, the board noted the average profit guarantee of RM11 million PBT from FY2017 to FY2019 (average PBT) based on the profit guarantee of a cumulative audited consolidated PBT of not less than RM33 million for the corresponding period. The purchase consideration represents an implied PER of 12.73 times based on the average PBT," it said.

The filing added that the vendors will be undertaking a placement of not less than 23 million of the consideration shares to independent third party investors at a later date.

"With Taipanco operating in the logistics industry and being one of the key container haulage operators at Port Klang, and in view of its ownership of sizeable container transit yards in the Northport and Westport areas, the proposed acquisition represents a strategic opportunity for Transocean to strengthen its logistics division," Transocean said.

"Further, upon completion of the proposed acquisition, both companies will be able to leverage on each other's strategic alliances and the potential cross-marketing is anticipated to contribute positively to the group's future financial performance," it added.

Transocean noted that the group's financial performance has been deteriorating over the past four years and the proposed acquisition would enable it to revitalise its business and improve its lacklustre financial performance.

Transocean shares closed 5 sen or 5.88% higher to settle at 90 sen, with a market capitalisation of RM36.9 million.