KUALA LUMPUR (Aug 1): Solar power specialist Pekat Group Bhd (KL:PEKAT) said on Thursday it is buying a 60% stake in Apex Power Industry Sdn Bhd for RM96 million.
Apex Power and its wholly owned unit EPE Switchgear Sdn Bhd are among Malaysia’s largest manufacturers of medium voltage electrical switchgears, and are also involved in manufacturing, engineering and project activities within the power sector.
In terms of payment breakdown, Pekat said 10% or RM9.6 million will be paid as deposit, while 60% or RM57.6 million will be paid as first tranche payment subject to terms met, and the balance 30% or RM28.8 million will be paid as retention sum.
Apex Power has provided an aggregated profit guarantee of not less than RM48 million for the combined periods in financial year ending Sept 30, 2024 (FY2024) to FY2026.
Pekat also said it believes the aggregated profit guarantee is realistic, taking into consideration the unbilled order book of EPE Switchgear is approximately RM204.32 million as of July 17, 2024.
The company also said the acquisition is in line with its business expansion objectives and growth strategy in the long term to establish presence in the power distribution equipment business sector.
In conjunction with the acquisition, the company will seek shareholders’ approval for business diversification into the new business segment as it is anticipated that more than 25% of the company’s net assets will be diverted towards this new business segment.
Moving forward, Pekat said it intends to market and integrate its existing products and services with a range of power distribution equipment marketed under the “EPE” brand
The purchase will be funded via internally generated funds and bank borrowings.
At noon break on Thursday, Pekat shares were up two sen or 2.1% to 97.5 sen, valuing the company at RM628 million.