KUALA LUMPUR (Sept 11): Batu Kawan Bhd (KL:BKAWAN) said on Friday that it has mutually agreed with TMK Chemical Bhd (KL:TMK) to further extend the exclusivity period to negotiate the acquisition deal announced in June.
TMK Chemical had on June 12 proposed to acquire Batu Kawan’s wholly-owned subsidiary, Chemical Company of Malaysia Bhd (CCM), for RM920 million in a cash-and-shares deal.
The companies had executed an agreement to negotiate exclusively for an initial two-month period ending on Aug 12 under the Letter of Intent. Subsequently, both companies agreed to a one-month extension until Sept 12.
In a bourse filing on Friday, Batu Kawan said both parties remain in discussion and have mutually agreed to a further extension of the exclusivity period until Sept 19. Exclusivity period is a legally binding window of time during which a seller agrees to negotiate strictly with a buyer.
The proposed acquisition 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.
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.
The deal will also see Batu Kawan emerge as TMK Chemical’s second largest shareholder with at least 20% interest.
Batu Kawan had 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.
Batu Kawan shares closed 12 sen or 0.6% higher at RM20.16 on Friday, valuing the company at RM8.05 billion. Meanwhile, TMK Chemical closed six sen or 2.08% higher at RM2.94, giving it a market capitalisation of RM2.94 billion.