KUALA LUMPUR (June 23): Uncertainty in the global fertiliser industry, driven by Middle East tensions, supply chain disruptions and volatile costs, has prompted Hextar Global Bhd (KL:HEXTAR) to scale back its proposed acquisition of three companies to two, as part of its expansion into the fertiliser business.
Under the initial plan announced in December last year, the group had proposed to acquire three companies from its 52.4%-owned unit Hextar Industries Bhd (KL:HEXIND), namely PK Fert Sdn Bhd, PK Fertilizers Sdn Bhd and Hextar Fert Sdn Bhd, for a total RM120 million.
The change more than halves the related-party deal to RM54.5 million, with the revised deal now covering only PK Fert and Hextar Fert, valued at RM3.3 million and RM51.2 million respectively.
Hextar Industries has decided to keep PK Fertilizers to strengthen its fertiliser supply chain and support long-term growth, amid uncertainty in the global fertiliser market caused by geopolitical tensions, supply chain disruptions and fluctuating costs.
In a bourse filing on Tuesday, Hextar Global said despite removing PK Fertilizers from the deal, Hextar Global's board believes the revised acquisition still supports its plan to diversify into the fertiliser industry.
By acquiring PK Fert and Hextar Fert, the group will gain access to established fertiliser businesses with proven track records, existing customers and experienced management teams.
The exclusion of PK Fertilizers has lowered Hextar Global's investment commitment and risk while maintaining its strategic goal of entering the fertiliser sector.
The board said the revised deal remains commercially viable as PK Fert and Hextar Fert provide a strong platform for the group's fertiliser business expansion.
The acquisitions are expected to contribute positively to earnings from the financial year ending Dec 31, 2026 onwards. The deal will be funded via a combination of bank borrowings and internally generated funds, and is targeted for completion in the second half of 2026.
As at end-March, Hextar Global had cash and bank balances of RM84.73 million against total borrowings of RM400.78 million.
Datuk Ong Choo Meng and his father Datuk Ong Soon Ho are substantial shareholders in both Hextar Global and Hextar Industries. Together, they hold a 51.8% stake in Hextar Industries via Hextar Holdings Sdn Bhd.
In Hextar Global, Soon Ho has an indirect interest of 54.96% via Hextar Holdings, while Choo Meng holds a direct stake of 2.92% and an indirect interest of 51.75% as at June 18.
The proposed acquisition is subject to approval from non-interested shareholders at an extraordinary general meeting, as well as other relevant authorities, if required.
At Tuesday’s closing bell, shares of Hextar Global closed unchanged at 77 sen, giving it a market capitalisation of RM3.01 billion. Hextar Industries slipped half a sen or 1.82% to 27 sen, valuing the group at RM728.54 million.