KUALA LUMPUR (Sept 3): Zetrix AI Bhd (KL:ZETRIX) has yet to fix the issue price of the new shares that will form the bulk of the RM130 million consideration for its proposed acquisition of a 50% stake in MyEG Ventures Inc, citing volatility in its own share price.
In response to queries from Bursa Malaysia late Wednesday, the company said the acquisition will be funded mainly through the issuance of up to 360.57 million new Zetrix AI shares. The issue price will be based on the five-day volume-weighted average market price of Zetrix AI shares immediately before the issuance.
However, with Zetrix AI shares having fallen sharply in recent trading sessions, the company said the issue price has not been fixed at this juncture. It will make a further announcement once the price has been determined.
The balance of the RM130 million purchase consideration, after deducting the value of the new shares issued, will be settled in cash using the group’s internally generated funds.
Zetrix AI announced the proposed acquisition of a 50% stake in MyEG Ventures a day after its shares fell to a 12-year low of 26.5 sen.
The stock had dropped from 66 sen on Aug 26 to 22 sen on Sept 2, a day after the deal was announced, wiping out two-thirds of its value in less than a week, before rebounding two sen, or 9.1%, to 24 sen on Thursday. This gave the company a market capitalisation of RM1.93 billion.
The proposed acquisition was announced on Tuesday, when Zetrix AI said it had agreed to acquire 15.25 million shares, representing a 50% stake in MyEG Ventures, from Next Lion Ltd for RM130 million in a share-and-cash deal. Next Lion’s sole shareholder and director is Yap Shon Leong.
MyEG Ventures is principally involved in providing information technology services and holds a 51% stake in MyEG Philippines Inc. Zetrix AI currently owns the remaining 49% directly.
In a response to queries from Bursa Malaysia, Zetrix AI also corrected an “inadvertent error” in its earlier announcement, which had stated that MyEG Ventures held a 60% stake in MyEG Philippines. The group clarified that the actual stake is 51%.
Upon completion of the acquisition, Zetrix AI’s effective interest in MyEG Philippines will rise to 74.5%, comprising its existing 49% direct stake and a 25.5% indirect interest through MyEG Ventures. MyEG Philippines will consequently become a subsidiary of Zetrix AI.
Zetrix AI said the RM130 million purchase consideration was based on its internal valuation of MyEG Ventures, taking into account MyEG Philippines’ financial performance, growth prospects and five-year projections.
The board considers the consideration fair and reasonable, citing MyEG Philippines’ growing revenue and profits over the past five years and the strategic value of increasing its effective stake in the business.
However, Zetrix AI did not disclose MyEG Philippines’ financial information in its response to Bursa Malaysia.
MyEG Ventures recorded a total comprehensive loss of 394,363 Philippine pesos in FY2024, following another loss in FY2023.
As at FY2024, MYEG Ventures had cash of 2.4 million pesos and RM33.9 million in unsecured, non-interest-bearing advances to MyEG Philippines. It had no borrowings.
Zetrix AI said the acquisition is expected to give it greater control over MyEG Philippines and generate potential synergies and economies of scale by integrating the business with its existing operations.
The group also plans to leverage its blockchain and artificial intelligence platforms to pursue opportunities in the Philippines and other markets, with the acquisition forming part of its broader Asean expansion strategy.
The conditions precedent to the acquisition are expected to be fulfilled by the end of the third quarter of 2026.
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