KUALA LUMPUR (Oct 27): Hextar Global Bhd said it is acquiring the entire equity interest in Propel Chemicals Sdn Bhd (PCSB) for RM16.5 million cash to further expand its oil and gas (O&G) specialty chemicals portfolio.

In a filing with Bursa Malaysia on Friday, the agrochemical company said its subsidiary Hextar Kimia Sdn Bhd is buying PCSB from Propel Global Bhd (with a 55% stake), Rancak Nikmat Sdn Bhd (36.9%), and Wiramas Baiduri Sdn Bhd (8.1%).

The proposed acquisition, which is expected to be completed in the fourth quarter of 2023, will be funded through internally generated funds.

PCSB is principally involved in the manufacturing, trading and distribution of specialty chemicals, as well as the provision of environmental chemical services to the O&G industry.

Hextar Global executive director Rayburn Azhar Ali said PCSB's extensive track record of over 30 years in the supply of specialty chemicals and more than 10 years in the supply of oilfield chemicals will enable Hextar Global to qualify for major O&G chemical tenders.

He said PCSB's licensed chemical storage and refilling facility in Kemaman will triple Hextar Global's current capacity, which will enable the group to expand its specialty chemical repacking business.

“The Hextar group has been very active in merger and acquisitions, as we continuously look into investment opportunities that will complement our businesses.

“These recent acquisitions will significantly strengthen our presence in the O&G specialty chemicals industry, and solidify the group’s growth profile.

“We expect the consolidation of PCSB to contribute positively towards the Hextar group’s revenue and earnings upon the completion of the proposed acquisition,” said Rayburn.

In a separate statement, Propel Global executive director and group chief executive officer Angeline Lee said the divestment represents a strategic move to exit an unprofitable venture with limited growth prospects.

"We wish to emphasise that the decision to pursue the disposal is driven by PCSB's three-year financial losses and its struggles as a smaller player in the specialty chemicals market, competing against larger rivals with scale advantages,” she said.

Following the disposal, Propel Global intends to use the proceeds to finance its working capital and largely to settle the outstanding revolving credit of PCSB.

Hextar Global shares closed unchanged at 75 sen on Friday, giving the group a market capitalisation of RM2.93 billion. Propel Global finished half a sen or 3.03% lower at 16 sen, valuing the company at RM105.73 million.