KUALA LUMPUR: Sarawak Cable Bhd (SCB) is teaming up with Austin Corp (M) Sdn Bhd to acquire the entire equity interest in steel fabricator Sarwaja Timur Sdn Bhd (STSB) for RM38.5 million. The stake will be purchased from Sarawak Energy Bhd and Syarikat Sesco Bhd.

In a statement to Bursa Malaysia, SCB said the acquisition, which will be financed via cash and stock, would enable the company to gain immediate entry into the power transmission facility construction sector.

“The proposed acquisition is also expected to contribute positively to the future earnings of SCB Group. The purchase price will be partly satisfied by the issuance of the consideration shares and will lessen the cash outlay of SCB Group,” SCB said.

Under the deal, SCB will acquire 75% of STSB for RM28.88 million to be financed via a combination of cash and the issuance of 10 million new SCB shares. The company is also planning a private placement of five million new shares to institutional investors to finance the acquisition.

Meanwhile, Austin will buy the balance 25% in STSB for RM9.63 million which will be financed entirely by cash.

Upon completion of the purchase, SCB said it would become a one-stop manufacturing base and integrated solutions provider for the provision of power cables, wires, and fabrication of transmission towers in Sarawak.

SCB said the acquisition and private placement, which are expected to expand SCB’s issued share base, are due for completion in the fourth quarter of this year.

This article appeared in The Edge Financial Daily, October 21, 2010.