KUALA LUMPUR (Dec 3): Solarvest Holdings Bhd (KL:SLVEST) has proposed to acquire a 30% stake in Penang-based SIW Manufacturing Sdn Bhd (SMSB) to expand its presence in the clean energy and sustainable technology ecosystems.
The group on Tuesday signed an agreement with the two shareholders of SMSB, Chan Chee Wei and Voon Sin Choo, to acquire the firm for RM36 million, according to Solarvest's bourse filing.
The acquisition will be executed in three tranches and funded through a combination of internally generated funds and debt financing. The first tranche of RM12 million is to be paid by Dec 31, the second tranche of RM12 million by April 30, 2025, and the final tranche of RM12 million by July 31, 2025.
“Leveraging SMSB’s expertise in waste gas abatement and gas systems, the acquisition unlocks opportunities for operational synergies and complements Solarvest’s existing clean energy solutions," said Solarvest.
"SMSB’s specialisation in manufacturing waste gas abatement systems and gas system-related modules are essential in enabling clean and efficient operations globally. This acquisition positions Solarvest to expand its footprint into complementary markets with substantial growth potential," it added.
The group said the RM36 million price was determined on a willing buyer, willing seller basis, taking into account a profit guarantee from the vendors. The vendors have guaranteed that SMSB’s audited profit after tax for the financial year ending Dec 31, 2024 (FY2024) and FY2025 would be no less than RM14 million and RM16 million, respectively.
Additionally, the vendors have warranted that SMSB’s audited net tangible assets as of end December 2024 will not be less than RM48 million. Should this condition not be met, Solarvest has the right to exercise a put option.
SMSB posted a 30.6% drop in after tax profit for FY2023 to RM13.02 million from RM18.77 million in the previous year, as revenue fell 33.43% to RM73.78 million from RM110.84 million.
Shares of Solarvest closed down one sen or 0.63% at RM1.59 on Tuesday, giving a market capitalisation of RM1.15 billion.