KUALA LUMPUR (Jan 23): Unitrade Industries Bhd (KL:UNITRAD), a building material wholesaler and distributor, says its 51%-owned subsidiary Intergreen Metal Sdn Bhd is acquiring a controlling stake in metal recycling specialist Kien San Metal Sdn Bhd (KMSB) for RM42 million to expand its business to Sabah and Sarawak.
Intergreen has inked a share sale agreement with KMSB's sole shareholder Hong Ching Chung on Thursday to take up a 51% stake in KMSB. The acquisition will give Unitrade an effective 26.01% stake in KSMB on completion of the acquisition in the second quarter of this year.
Established in 1993, KMSB operates eight yards spread out across Kuching, Sibu, Bintulu, Miri, and Kota Kinabalu, according to Unitrade in a statement.
The acquisition will be funded using Unitrade's internal funds and a proportionate capital injection from Intergreen's minority shareholders.
The deal comes with a profit guarantee, where KMSB is expected to achieve an aggregate profit after tax of RM30 million over the financial years ending March 31, 2026, 2027, and 2028.
Unitrade managing director Nomis Sim Siang Leng said KMSB's strong presence in Sabah and Sarawak complements Intergreen's existing operations in Peninsular Malaysia. By combining their strengths, Unitrade will have a stronger national foothold in the metal recycling industry.
"This initiative not only supports market expansion but also strengthens our role in the upstream value chain," Nomis said.
"As recyclable ferrous metal is a raw material in steel production, the proposed acquisition is synergistic with our core building materials wholesale distribution business, especially for steel-based products.
"With Intergreen and KMSB, we can both supply metal waste to and purchase steel products from steel product manufacturers," Nomis added. "This allows us to leverage our expanded role to negotiate more favourable pricing from both upstream and downstream perspectives."
Unitrade's shares gained 2.63% or half a sen to close at 19.5 sen on Thursday, valuing the company at RM309.8 million.