KUALA LUMPUR (April 13): Glove maker Hong Seng Consolidated Bhd has cancelled its plan to buy CSH Alliance Bhd's electric vehicle (EV) distribution business for RM20 million, just two months after the parties inked the share sale agreement for the transaction.
Hong Seng said the deal was mutually terminated after it realised that the 55-acre land held by the EV business, Alliance EV Sdn Bhd (AEV), was not suitable for it to set up an EV battery manufacturing plant — dubbed as Project Volt.
When Hong Seng proposed the acquisition in February, it was eyeing both the land and AEV's Project EV, under which AEV plans to set up a local EV assembly plant to put together commercial electric vans for the world's top-selling EV maker, BYD Co Ltd. CSH Alliance had previously touted that AEV had obtained a manufacturing licence from BYD for the latter's T3 electric vans.
The land's terrain would constrain the ideal size for both projects and their future expansion developments, said Hong Seng in a Thursday (April 13) filing.
Nevertheless, Hong Seng is still keen on Project Volt. It plans to collaborate with US company EoCell Inc for that and will identify and source for another suitable land for that, it said in a separate statement.
CSH Alliance, which had wanted to sell AEV despite its bright prospects because of extensive resources and substantial working capital needed for the EV business, now said the project is "viable to continue" following the mutual termination, adding the Tanjung Malim land is more than sufficient for Project EV and its future expansion.
AEV will adopt cautious measures to implement the plan in stages, CSH Alliance said in its own filing, as it reiterated the long-term positive prospects of the EV business.
It also said it had obtained approved permits from the Ministry of Investment, Trade and Industry, and that AEV had been preparing for the import and shipment of BYD T3 vans into the country. "Following the termination, CSH through AEV will continue to work closely with BYD to commence the distribution of BYD T3 with the subsequent plan to set up the local EV assembly plant on the Tanjung Malim land. As such, AEV expects to launch the sales of BYD T3, a compact fully electric van to cater to the rising demand in the logistics and courier industry in reducing their carbon footprints in the near future," it added.
It further said its newly appointed executive director Datuk Goh Soo Wee will "source for potential partners and/or investors to carry out and realise the Project EV in collaboration with BYD", which it plans to expand to include buses, trucks and more.
It should be noted that when CSH Alliance announced the disposal, it was queried by Bursa Securities on why it wanted to do so less than a year after it said it had secured a collaboration with BYD in March 2022.
Hong Seng closed unchanged at 13 sen on Thursday, giving it a market capitalisation of RM638.55 million. The counter shot up to 21.5 sen on Feb 15, two days after the announcement on acquiring AEV, but has since tumbled 39.53%.
CSH Alliance, meanwhile, dropped 30.77% from 6.5 sen on Feb 13 to 4.5 sen by Feb 15, where it hovered until now, valuing the group at RM62.16 million.