KUALA LUMPUR (May 5): ES Ceramic Technology Bhd, a maker of hand formers for rubber glove producers, has proposed to acquire Evermix Concrete Sdn Bhd for RM83 million in a bid to diversify into the manufacturing and trading of construction materials.
In a bourse filing, ES Ceramic said the acquisition will be satisfied via a combination of RM65 million cash and the remaining RM18 million will be paid in the form of new ES Ceramic shares, at an issue price of 32 sen per share.
Post-acquisition, Evermix, which is principally involved in the manufacturing and supply of chemical products and construction materials including ready-mix concrete, will become a wholly-owned subsidiary of ES Ceramic with 70% equity interest. The balance 30% will be held through Euroceramic Technologies Co Ltd — ES Ceramic's subsidiary in Thailand.
Lim Ming Jee is the largest shareholder of Evermix, holding 49% of the company, while Tan Boon Sing and his spouse Stella Teo Moi Lin own 37.25% and 13.75% respectively.
The proposed acquisition comes with a profit guarantee of no less than RM11 million for the cumulative two financial years. Post acquisition and fulfilment of the profit guarantee, the vendors’ aggregate shareholding in ES Ceramic will increase to 10.02%.
The purchase price represents a price to earnings multiple of 15.1 times, based on the average profit guarantee of RM5.5 million per year.
Evermix booked a net profit of RM2.98 million for the financial year ended Dec 31, 2021 (FY21), from RM4.05 million in FY20 and RM5.4 million in FY19.
ES Ceramic said the cash consideration will be funded via internal funds.
“Following the proposed acquisition, it is anticipated that Evermix’s business of manufacturing and trading of construction materials may potentially contribute 25% or more of the group’s net profit and/or result in a diversion of 25% or more of the group’s net assets towards the business.
“As such, in accordance with Rule 10.13(1) of the Listing Requirements, the company is required to obtain its shareholders’ approval in an extraordinary general meeting (EGM) for the proposed diversification," ES Ceramic noted.
The proposed acquisition is expected to be completed in the second half of 2022.
ES Ceramic’s share price closed down 1.5 sen or 4.35% to 33 sen on Thursday (May 5), bringing it a market capitalisation of RM167 million.