KUALA LUMPUR (Oct 25): Pantech Group Holdings Bhd is buying out the 43.46% stake held by its partner Euromech Machinery Sdn Bhd in Pantech Galvanising Sdn Bhd (PGSB) for RM7.02 million cash as part of its expansion initiative in the galvanising industry.

Pantech said the proposed acquisition will also enable it to have full control of the affairs and business direction of PGSB.

In a filing with Bursa Malaysia today, Pantech said it has entered into a share sale agreement with Euromech to acquire 9.8 million shares in PGSB.

On Sept 29, 2015, Pantech had entered into a joint venture (JV) agreement with Euromech to form Johor-based PGSB, which is involved in the hot-dip galvanising business. Under the JV, Pantech holds 12.75 million shares or a 56.54% stake in PGSB and the balance by Euromech.

Pantech said it will finance the proposed purchase through internal funds.

It added that it intends to streamline all its business activities of PGSB for better managing and controlling of the galvanising activities under the same portfolio.

PGSB commenced operations in December 2016 and is equipped with the largest hot-dip galvanising facility in Johor, with a planned capacity of 48,000 tonnes per year.

Pantech said the venture has begun contributing positively to the group's revenue and the output is expected to achieve 50% capacity by the end of its financial year ending Feb 28, 2018 (FY18).

"The proposed acquisition represents a strategic investment by the group for its expansion initiative in the industry, which is expected to contribute positively to the revenue of Pantech Group, as well as to the shareholders’ value in the future," it added.

It did not say when it expects to complete the proposed acquisition.

Pantech shares closed 2.82% or 2 sen higher at 73 sen — its highest since end-November 2014 today, giving it a market capitalisation of RM538.21 million.