KUALA LUMPUR (Sept 14): AWC Bhd announced it is buying the remainder 49% stake it does not own in automated waste collection system provider Stream Group Sdn Bhd, for RM110 million, confirming a report by The Edge earlier on Thursday.
At the same time, it is taking over the remaining 51% stake that Stream Group does not own in Premium Patents Sdn Bhd, which holds the intellectual property rights of assets required for Stream Group's current business, for RM1, its bourse filing on Thursday showed.
AWC is buying the 49% in Stream Group from Premium NXL Sdn Bhd, and the 51% stake in Premium Patents from Premium NXL and Premium Deluxe Sdn Bhd. It had inked a conditional share sale and purchase agreement for the acquisitions.
The nominal RM1 value ascribed to the Premium Patents sale shares was arrived at after taking into account Premium Patents' negative shareholders' equity position based on its audited financial position as at June 30, 2022, AWC said. "Notwithstanding this, it shall not be taken to mean or indicate that a nominal value has been ascribed to the Premium Patents sale shares, particularly insofar as its overall significance to the proposed acquisitions effected by the SSA is concerned," AWC said.
AWC said the proposed acquisitions will allow it to obtain full control in Stream Group to drive its future strategic direction and growth, and enable AWC to fully realise all the efforts and initiatives put in place by the company and its management in Stream Group.
"In addition, upon completion of the proposed acquisitions, Premium Patents will become an indirect wholly-owned subsidiary of AWC. By acquiring the remaining stake in Premium Patents from the vendors, AWC Group will have 100% ownership in the patented 'Waste Shuttle' system, and this will enable AWC Group to better position and market the system to its potential clients globally, as well as support operational efficiency for Stream Group's Automated Waste Collection System (AWCS). The application of the 'Waste Shuttle' system can also reduce the energy cost of Stream Group's AWCS by approximately 70%," AWC said.
The adoption for Stream Group's AWCS is on the rise in markets like Singapore, Indonesia and Saudi Arabia, according to AWC group chief executive officer and president Datuk Ahmad Kabeer. “We believe that this is an opportune time for this acquisition as the Stream Group is set for another multi-year growth phase. With the ample resources at our disposal, we are keen to support and be part of this growth story,” Ahmad said in a separate statement.
According to The Edge's report earlier, Stream Group had been a profitable investment for AWC since it bought into the company in 2004, when it was known as Nexaldes Sdn Bhd. The report also noted that Stream Group made a net profit of RM23.42 million for the financial year ended Dec 31, 2022 (FY2022) — more than AWC’s reported net profit of RM21.53 million in the period — on revenue of RM81.9 million.
The acquisitions, which require its shareholders' approval, are expected to be completed in the first quarter of 2024.
AWC shares closed 0.5 sen or 1.08% higher at 47 sen on Thursday, valuing the company at RM150.05 million.