KUALA LUMPUR (Dec 6): Halex Holdings Bhd plans to buy Hextar Chemicals Ltd (HCL) at an indicative price of RM550 million in a bid to eliminate business competition.

Halex said the acquisition will also allow the company and its subsidiaries to expand its agrochemical business by tapping into HCL’s customer and supplier network in more than 30 countries worldwide.

“It is also expected to potentially provide value-added services to Halex’s customers through a combined range of products and services,” Halex said in a filing with Bursa Malaysia.

HCL is owned by Hextar Holdings Sdn Bhd, whose major shareholders are the directors of Halex.

Halex said it has entered into a heads of agreement with the directors, Datuk Ong Soon Ho and Datuk Ong Choo Meng.

Based on the management accounts of HCL group for the 10-month financial period ended Oct 31, 2017, the group posted a profit after tax (PAT) of about RM34 million and is expected to post an annualized PAT of about RM40 million for the year ending Dec 31, 2017.

As the proposed acquisition is a related party transaction, Halex said RHB Investment Bank has been appointed as the principal adviser to Halex, while M&A Securities Sdn Bhd has been appointed as the independent adviser to advise the non-interested directors and non-interested shareholders.

Halex’s share price closed 11 sen or 12.43% higher at 99.5 sen today, giving it a market capitalisation of RM105.44 million.