KUALA LUMPUR: Pantech Group Holdings Bhd, has entered into an agreement to acquire UK-based Nautic Steels (Holdings) Ltd and its wholly-owned Nautic Steel Ltd from Robert Andrews, for a maximum of £9.5 million (RM45 million).
Pantech, a manufacturer of steel pipes and fittings, will wholly own the two companies which have a mainstay in milling, machining and welding tube and pipe fittings for special metals for the marine oil industry. The special metals are resistant to critical, corrosive and high temperature environments.
Pantech said the acquisition will allow the company to strengthen its prospects in this area of business and enable it to grow its regional presence and expand its activities.
“It will allow Pantech to have a larger network, thereby providing it the ability to offer its services to a wider range of the market and pursue further contract opportunities,” the company said.
Pantech also said it will be able to tap Nautic’s technical know-how in the manufacturing of niche products.
“The knowledge transfer complements Pantech’s existing manufacturing capabilities in the production of carbon steel fittings, and stainless steel pipes and fittings,” Pantech said.
The company will also be able to increase and improve its production of high value-added products such as duplex stainless steel and copper nickel.
The price tag of RM45 million will be satisfied via RM9.75 million raised from a rights issue, RM25 million from a term loan and the remaining RM11 million from internally generated funds.
As at Nov 30, 2011 Pantech had RM62.4 million in cash and bank balances, and RM45.38 million in fixed deposits with licensed banks, in contrast to RM191.1 million in both short- and long-term borrowings.
Pantech said the acquisition is in line with its strategy to grow its core businesses by expanding its foothold as a major pipes, fittings and flow control solutions provider.
The stock ended trading yesterday at 54 sen, inching up 1.5 sen.
This article appeared in The Edge Financial Daily, March 9, 2012.