KUALA LUMPUR (Jan 24): In a turnaround effort, Nationwide Express Holdings Bhd proposes to take over the biggest courier and air-cargo co-loader consolidator in Malaysia for RM40 million in cash.

The price tag of the acquisition is equivalent to about 77% of the company’s market capitalisation of RM51.7 million.

Nationwide announced to Bursa Malaysia that it entered into a conditional share acquisition agreement to acquire MTR Services Sdn Bhd, MTR Freight Sdn Bhd, and MTR Services (Sarawak) Sdn Bhd from co-owners Wong Fok Lim and Foo Shiew Khiang.

The acquisitions are expected to be completed by June 2017 upon approval by shareholders and related parties. The proposed acquisitions will be funded through internally-generated funds and bank borrowings, according to the announcement to Bursa.

“The target companies are the largest courier air-cargo consolidator (co-loader) in Malaysia, particularly in Sabah and Sarawak, with capability to undertake niche project logistics.

“The three MTR companies have more than 14 years’ experience in courier sevices with 46 trucks in Malaysia,” said Nationwide in the filing with Bursa Malaysia.

Nationwide is a major customer of the companies, which are also air-cargo sales agents for major airlines such as Raya Airways, AirAsia, Malindo Airways and Malaysia Airlines.

With the acquisition, Nationwide aims to “rationalize its supply chain to enhance operational efficiency and cost control measures”, as well as expand to East Malaysia by leveraging on the target companies’ strong presence and trucking capabilities there.

Wong and Foo have given a profit guarantee that the three companies would collectively generate RM120 million in revenue and RM6 million in profit after tax (PAT) between 2018 and 2020, according to Nationwide.

With the purchase, Nationwide looks set to fortify its presence in the courier service industry. To recap, NEHB also proposed the acquisition of Airpak Express (M) Sdn Bhd on Nov 8 last year.