KUALA LUMPUR (July 12): Radiant Globaltech Bhd (KL:RGTECH) has announced plans to acquire an 80% stake in IT solutions provider Rymnet Solutions Sdn Bhd, for RM52.5 million.

Rymnet specialises in digitalisation of human resource (HR) management operations.

In a filing with Bursa Malaysia, Radiant Globaltech said it has signed a term sheet with Rymnet founder, chief executive officer and major shareholder Un Sze Hau on Friday. The parties expect to finalise a formal share purchase agreement within 30 days.

Radiant Globaltech said the proposed acquisition will bode well with its business strategic plans to widen and diversify its IT solution offerings. Through the proposed acquisition, the group will be able to incorporate HR management system modules into its existing suite of solutions, thereby offering a more comprehensive and integrated service to its customers.

“This enhancement not only improves the value proposition for potential customers but also generates significant cross-selling opportunities with existing customers. By leveraging its established customer relationships, the group can effectively introduce the new HR management modules, thereby increasing adoption rates and boosting customer retention,” said the retail technology solutions provider.

The acquisition deal will be financed through a combination of cash and shares. Specifically, Radiant Globaltech will pay RM42.5 million in cash and issue 30.3 million new shares at 33 sen per share to Un to cover the remaining RM10 million.

The issue price was determined on a willing-buyer, willing-seller basis, and reflects a discount of approximately 9.98% from the one-month volume-weighted average market price of Radiant Globaltech shares, which was 36.66 sen up to July 11.

According to Radiant Globaltech, the acquisition is conditional upon Rymnet completing its purchase of the entire stake in Rymnet Solutions Pte Ltd (Rymnet SGP), making Rymnet SGP its wholly owned subsidiary. Rymnet SGP is involved in the sale and distribution of payroll software, HR services, and management consultancy services.

The price paid for Rymnet SGP in this pre-acquisition restructuring will be based on its audited net tangible asset value as of end-December 2023, which is estimated to be around RM890,000.

Notably, there is a profit guarantee clause under the proposed acquisition, where the vendors guarantee Radiant Globaltech a consolidated profit after tax (PAT) of RM5 million for the financial year ending Dec 31, 2024 (FY2024) and an adjusted PAT of RM6 million for FY2025.

Shares of Radiant Globaltech closed down one sen or 2.6% at 37.5 sen on Friday, giving it a market capitalisation of RM194.36 million. The counter has gained over 20% year-to-date.