KUALA LUMPUR (Sept 7): RGT Bhd has announced that it has entered into an agreement to acquire a 70% equity stake in Top Degree (M) Sdn Bhd (TDSB) for a purchase consideration of RM14 million.

According to a Bursa filing today, the group had on Sept 7, 2021 entered into a conditional share sale agreement (SSA) with Ong Liang Kheng, Kau Yoon Thiam and Kau Yan Tuck for the acquisition of the 2.73 million ordinary shares in TDSB.

TDSB will become a 70% subsidiary company of RGT upon the completion of the proposed acquisition. 

The total consideration of RM14 million for the sale shares was arrived at on a willing-buyer willing-seller basis.

According to the filing, the sale was done after taking into consideration that the vendors are offering a guaranteed profit after tax of no less than RM8 million over two years; a price-to-earnings ratio of five times (based on the average annual guaranteed profit of RM4 million), which yields a valuation of RM20 million for a 100% stake in the company; and the purchase of the 70% stake in TDSB, which allows RGT to consolidate the company's financial results.

Founded in 1993, TDSB is a vertically integrated automation solution provider servicing global multinational corporations (MNCs) in the electronics manufacturing services (EMS) sector.  

In a separate statement, RGT said the group will edge closer towards achieving its strategic vision of becoming a more integrated “One Stop Solution” design and manufacturing provider to global customers, whilst adding potential new growth avenues

RGT chief executive officer (CEO) Datuk Lim Seat Hoe is optimistic that with TDSB’s strength and experience, the group will be able to provide a wider range of services, from the manufacturing of high precision machining parts and components to designing, building and commissioning of automated systems including “Build to Requirements” customers as well as servicing MNCs beyond hygiene care and air care to those in the electronics and medical industry.

Lim explained that the group is looking not only to expand the existing core business but also to grow new synergistic businesses hence the strategy to integrate vertically to become a “One Stop” manufacturing solution provider.

Financially, the proposed TDSB acquisition is set to enhance the group’s earnings base and earnings per share. No new shares will be issued as RGT will use internally generated funds to acquire the 70% stake in TDSB. 

Post-acquisition, RGT plans to strengthen and grow TDSB further to undertake bigger projects from more MNCs. The group is also committed to enhancing its overall research and development, design and manufacturing capabilities.

Ultimately, the group aims to become a leading solutions provider in designing and building automated machines in the manufacturing sector while growing its existing original equipment manufacturer (OEM) and original design manufacturing (ODM) businesses.

RGT shares closed 2.7% or one sen higher to 38 sen, valuing the integrated solution providers of hygiene care and air care at RM248.23 million.