KUALA LUMPUR (June 12): TMK Chemical Bhd (KL:TMK) has proposed to acquire 100% equity interest in Chemical Company of Malaysia Bhd (CCM), a wholly owned subsidiary of Batu Kawan Bhd (KL:BKAWAN), in a RM920 million cash-and-shares deal. The deal will see Batu Kawan emerge as TMK Chemical’s second largest shareholder with at least 20% interest.
The proposal is deemed a related party transaction as TMK Chemical is controlled by Datuk Lee Soon Hian, the youngest brother of Batu Kawan chairman Tan Sri Lee Oi Hian. Soon Hian owns the largest stake in TMK Chemical with a 39.504% stake.
In a Bursa Malaysia filing on Friday, the chemical management and storage company said it has issued a non-binding letter of intent to Batu Kawan for the proposed acquisition which excludes CCM’s associate company Orica-CCM Energy Systems Sdn Bhd, as well as two parcels of land related to Orica-CCM. The excluded assets will be transferred at cost, subject to the relevant approvals being obtained.
TMK Chemical intends to satisfy the consideration through a combination of cash and new shares in the company. The cash portion will be funded via listing proceeds, external borrowings and internally generated funds. TMK Chemical raised RM385 million from its Main Market initial public offering in December 2024.
The share component will involve the issuance of new TMK Chemical shares at RM1.9098 per share, based on the five-day volume-weighted average price of TMK Chemical shares as at end-May.
In a separate filing, Batu Kawan said its board, excluding interested directors, has accepted in principle the non-binding offer, subject to due diligence, the appointment of an independent adviser and the execution of a definitive sale and purchase agreement.
The proposed deal is also subject to approval from non-interested shareholders at an extraordinary general meeting, it noted.
Batu Kawan bought a 56.32% stake in CCM from Permodalan Nasional Bhd for RM292.8 million, and subsequently privatised the company in 2021. CCM produces organic and inorganic chemicals, including chlor-alkali products, sulphur derivatives, specialty chemicals, and polymer coatings. Its products serve industries including rubber, water treatment, manufacturing, infrastructure, agriculture and healthcare.
The announcement comes as Batu Kawan is to launch a mandatory general offer for MKH Bhd (KL:MKH) after acquiring a 47.7% stake in MKH from the founding Chen family for RM549.8 million cash. Batu Kawan intends to take MKH private if it secures a 90% stake.
Shares of TMK Chemical fell four sen, or 1.8%, to close at RM2.25 on Friday, giving it a market capitalisation of RM2.25 billion. Batu Kawan shares, meanwhile, closed 50 sen, or 2.4%, lower at RM20.30, valuing the group at RM8.11 billion.