KUALA LUMPUR (July 3): Agrochemical company Hextar Global Bhd’s unit is acquiring PHG Ever Fresh Group Sdn Bhd for a cash consideration of RM84 million to venture into the durian wholesale business.

In a filing with Bursa Malaysia, Hextar Global said its 51%-owned subsidiary Hextar Fruits Sdn Bhd has entered into a share sale agreement with PHG Ever Fresh Group on Monday (July 3) for the acquisition of 100% equity interest in three of its subsidiary companies as well as a 55% equity interest in PHG Ever Fresh Plantation Sdn Bhd (PHG Plantation).

The three subsidiaries are PHG Ever Fresh Food (M) Sdn Bhd (PHG (M)), PHG Ever Fresh Food (TK) Sdn Bhd (PHG (TK)) and PHG Wholesale & Retails Sdn Bhd (PHG W&R), which are located in Raub, Pahang.

The group said RM34 million of the purchase consideration will be financed by internally generated funds, while the balance RM50 million will be funded by bank borrowings.

As at March 31, 2023, Hextar Global had total borrowings of  RM237.46 million, while its cash balance stood at RM67.83 million.

The proposed acquisitions are expected to be completed by the fourth quarter of 2023.

Upon completion, PHG (M), PHG (TK), PHG W&R and PHG Plantation will become subsidiaries of Hextar Fruits.

Hextar Global said the proposed acquisitions are in the group's best interest and will give an opportunity for Hextar to expand its business activities into the trading of durian and wholesale of fruits.

“The prospects and outlook of the durian industry continues to remain strong with increasing demand from both local and global consumers for the ‘king of fruits’, in particular for the Musang King,” Hextar group managing director Lee Chooi Keng said in a statement.

Lee said the proposed acquisition is intended to provide the group with a new income stream to expand its agriculture segment and enable Hextar Global to participate in the robust growth of the durian industry.  

"The proposed acquisition will also allow us to capitalise on the synergistic benefits and incremental revenue derived from supplying agrochemicals and fertiliser products to PHG Group’s suppliers," she said.

According to her, China has started off its durian production activities, but it is still work-in-progress, and the production volume is deemed negligible compared to China’s durian demand and consumption.

"As such, China will continue to rely on imports to meet its growing demand for durian. Thus, we are optimistic about our venture into this durian processing business," it said.

Hextar Global closed two sen or 2.6% higher at 79 sen on Monday (July 3), giving it a market capitalisation of RM3.11 billion.