KUALA LUMPUR (Dec 17): Loss-making PUC Bhd (KL:PUC) is buying the entire stake in digital marketing and business management consultancy Alevate Solutions Sdn Bhd (ASSB) for a purchase consideration of RM100 million.
The acquisition will be fully financed through the issuance of 800 million new shares in PUC, priced at 12.5 sen each. The shares will be issued to Tham Lih Chung (TLC), the sole shareholder and director of ASSB, according to PUC’s bourse filing.
The offer price is at a premium of 212.5% to PUC’s closing price of four sen on Tuesday.
The acquisition follows a heads of agreement inked by PUC with Eatcosys Sdn Bhd and TLC to acquire ASSB and digital money lender Alevate Capital Sdn Bhd for RM200 million worth of PUC shares.
However, Alevate Capital’s purchase was called off “as the respective parties are unable to mutually agree with the purchase consideration”, PUC said in its filing on Tuesday.
Post-acquisition, TLC would own 800 million PUC shares or 22% of PUC’s enlarged share capital, based on 2.779 billion outstanding shares in the company presently.
Other substantial shareholders in the company include group managing director and group CEO Cheong Chia Chou (8.02%), Liew Fook Meng (8.69%) and Lau Pak Lam (7.86%).
On ASSB, TLC has also guaranteed that the target acquisition company will achieve a minimum aggregate profit after tax of RM12.5 million for the Jan 1, 2025-Dec 31, 2026 period.
ASSB primarily provides marketing and business management consultancy, advertising, promotions and digital solutions software services that PUC said align closely with its current operations.
For the 11-month financial period ended November 30, 2024, ASSB recorded a profit after tax of RM4.26 million on revenue of RM8.5 million, driven by strong demand for its marketing consultancy services.
PUC stated that the purchase consideration was determined on a "willing-buyer, willing-seller" basis, after considering the fair market value of ASSB’s entire equity interest, as appraised by Strategic Capital Advisory Sdn Bhd.
The company explained that a relative valuation analysis methodology was used, resulting in a valuation range of RM84.56 million to RM116.51 million.
This range was based on various parameters, including comparisons to similar companies such as Bursa Malaysia-listed Catcha Digital Bhd (KL:CATCHA) and Stock Exchange of Thailand-listed ARIP Public Company Ltd.
PUC believes that this acquisition will complement its existing business and strengthen its position in the digital marketing space.
“Further, the board is of the view that the issuance of the consideration shares to settle the purchase consideration would enable the group to conserve its cash resources and thereby provide greater flexibility to utilise the cash resources moving forward,” it said.
The exercise is expected to be completed by 2Q2025, with TA Securities serving as principal adviser.
As of the end of September this year, PUC’s cash and bank balances, along with fixed deposits in licensed banks, totalled RM1.36 million. The company’s total borrowings amounted to RM4.09 million.
PUC has been in the red since 2019. For the first quarter ended September 30, 2024 (1QFY2025), the group posted a net loss of RM11.45 million, compared to a net profit of RM1.01 million in the same period last year, as revenue dropped by 67% to RM4.9 million from RM14.67 million.
Shares of PUC, which have fallen 20% year-to-date, closed unchanged at four sen on Tuesday. This gives the group a market capitalisation of RM111.2 million.