KUALA LUMPUR (April 1): Willowglen MSC Bhd (KL:WILLOW) is selling its core remote building automation business to Singapore’s Elixir II Pte Ltd in a cash-and-share deal worth up to RM215.2 million. As part of the transaction, Willowglen will take a 37.8% stake in Elixir II and partly fund this stake by pledging the shares it receives to a bank.
Elixir II, a 97.81%-owned unit of Elixir I Pte Ltd (wholly owned by Singapore-based private equity firm Prime Movers Equity), serves as a special purpose vehicle holding the Excel Marco Group, which provides process control and safety systems, automation and Industrial Internet of Things solutions, and operational technology cybersecurity services.
The deal plans to combine Willowglen's and Excel Marco’s strengths in industrial automation, allowing the group to offer end-to-end solutions — from design and systems to software and maintenance — to a wider client base in Malaysia, Singapore and the region, and handle larger and more complex infrastructure and industrial projects across the industrial automation value chain.
According to bourse filings, Willowglen MSC will sell its entire stake in Willowglen Services Pte Ltd (WSPL), principally involved in computer facilities management activities and installation of building automation systems for remote monitoring, for RM175.2 million. The consideration comprises RM72 million in cash and RM103.2 million in new shares of Elixir II, which will give Willowglen MSC a 37.8% equity interest in Elixir II.
Separately, Willowglen MSC will dispose of a 25% stake in Willowglen (Malaysia) Sdn Bhd (WMSB), which is principally involved in the sales, implementation and maintenance of computer-based control systems, for RM10 million, with an option agreement covering the remaining 75% at an exercise price of RM30 million. Elixir II may exercise the call option and Willowglen MSC the put option any time from Jan 1, 2027, to 24 months after the disposal is completed.
As part of the deal, Willowglen MSC will pledge RM103.2 million of its Elixir II shares to a bank and Elixir I will do the same with its shares. This allows Elixir II to borrow up to S$35 million to help pay for the transaction. Willowglen MSC will need shareholders' approval to execute the share charge as it exceeds 5% of its consolidated net tangible assets of the group.
The disposal values imply enterprise value/earnings before interest tax depreciation and amortisation multiples of 8.34 times and 13.01 times for the financial year ended Dec 31, 2024 (FY2024) and FY2025 respectively.
Willowglen MSC said it expects a RM145.2 million gain and immediate cash proceeds of RM112 million from the deal.
About RM24.24 million will be paid as dividends (five sen per share) within two months.
The remaining RM85.96 million will be used to acquire new business to maintain its listing status, which could be affected due to the sales of its core business units that account for over 70% of its revenue. It has not identified any new business for acquisition.
Willowglen MSC proposes to change its name to Willownex Bhd with the deals announced. The transactions are subject to shareholder approval at an extraordinary general meeting to be convened.
Shares in Willowglen, which were suspended pending the announcement, last closed at 27.5 sen, valuing the company at RM136.4 million. Trading will resume at 9am on Thursday.