KUALA LUMPUR (Jan 23): Econframe Bhd (KL:EFRAME) is buying Ipoh-based manufacturer and seller of wooden doors Ivory Pearl Sdn Bhd (IPSB) for RM56 million, in a move to expand its footprint in the UK and Australian markets. 

Econframe is paying RM46.67 million in cash — to be funded via a combination of internally generated funds and bank borrowings — to buy IPSB from the major shareholders, which include Yeong Chew Tet and Lee Kok Choy, who owned 31.5% stake and 17.1% stake in the company, respectively.

The remaining RM9.33 million will be settled through the issuance and allotment of 16.5 million consideration shares at an issue price of 56.53 sen per share. This will result in Yeong and Lee becoming substantial shareholders in Econframe post-acquisition, expected to be completed by the second quarter of 2025, according to the company's filing with Bursa Malaysia.

IPSB is principally involved in manufacturing and sale of doors, particularly internal doors, external doors and fire-rated wooden doors. The company’s primary markets include the UK and Australia.

While Econframe is in a similar business, the group’s customers are all derived in Malaysia, with no presence in the overseas markets. 

The proposed acquisition will thus enable Econframe to expand its footprint in the UK and Australian markets by leveraging IPSB's customer base. 

Upon completion of the proposed acquisition, Econframe’s production capacity will increase by approximately 162,000 units of door per annum.

“The increase in Econframe’s manufacturing capacity, coupled with the opportunity to cross-sell Econframe’s other products and services to IPSB’s overseas customers, as well as consolidation of resources, is expected to contribute positively to the financial performance of Econframe moving forward,” it said.

Econframe believes the proposed acquisition of IPSB presents a significant opportunity to enhance its financial performance.

IPSB's shareholders have irrevocably guaranteed that IPSB will achieve a minimum profit after tax (PAT) of RM5 million for the 12-month period ending Aug 31, 2025. Furthermore, they have committed to a cumulative minimum PAT of RM10 million by Aug 31, 2026.

Shares of Econframe closed down half a sen or 0.88% at 56.5 sen on Thursday, giving it a market capitalisation of RM209.8 million.