KUALA LUMPUR (Oct 26): Citaglobal Bhd has acquired a 30% stake in submarine cable systems company iFACTORS Sdn Bhd for RM25.2 million, the infrastructure group said in a statement on Thursday.
This confirms a report by The Edge that the group was venturing into submarine cable laying.
The stake acquisition comes with a two-year profit guarantee of RM21 million, and to date, iFACTORS has an order book of RM528 million, the group added.
Meanwhile, the group also highlighted that it has an option to purchase another 21% stake in iFACTORS once the profit guarantee of RM21 million has been met.
“We see a huge opportunity in welcoming iFACTORS into the Citaglobal family and supporting them in their next chapter. For the Citaglobal group, this acquisition unlocks immediate access to the lucrative submarine cable systems market.
“While the expertise and passion of the team at iFACTORS has led to their healthy order book and impressive growth, we have every intention of bringing iFACTORS to greater heights, in line with our strategy.
“The board is confident that this venture into the submarine cable business will enable the group to diversify its revenue and earnings streams, enhancing our profitability and creating value for our shareholders,” said Citaglobal executive chairman and president Tan Sri Mohamad Norza Zakaria.
According to the group, iFACTORS has also recently secured a US$60 million (RM287 million) contract for the construction of a subsea fibre optic cable system between Tawau, Malaysia, and Parang, a municipality in the Philippines.
iFACTORS is principally involved in the business of maintenance and services of telecommunications equipment and components.
The group intends to finance the acquisition via a combination of cash and new consideration shares priced at RM1.50 each, and the deal is expected to be completed by the first quarter of next year.
Astramina Advisory is acting as the financial adviser to Citaglobal for the proposed acquisition.
Shares in Citaglobal finished two sen or 1.27% higher at RM1.60 on Thursday, giving the group a market capitalisation of RM668.15 million.