KUALA LUMPUR (Oct 8): GDB Holdings Bhd (KL:GDB) is expanding its construction business through the proposed acquisition of two companies, while diversifying into property development to broaden its earnings base.

In a bourse filing on Thursday, GDB said it plans to acquire a 51% stake each in Bina Tegas Sdn Bhd and BT Borneo Engineering Sdn Bhd for a total consideration of RM81.6 million. The acquisition will be funded through RM40.8 million in cash and the balance RM40.8 million via the issuance of 96.91 million new GDB shares at 42.1 sen each.

The vendors of Bina Tegas are Leong Chee Kit, Low Lip Kai and Tham Wai Leong, while those of BT Borneo are Leong, Low, Tham and Lim Khoon Sin.
 
GDB said the acquisitions will strengthen its position in the construction industry by combining its resources, expertise and business relationships with those in the two target companies.

Upon completion of the acquisitions, GDB’s construction order book is expected to increase to about RM741.81 million from RM476.13 million as at end-June this year.
 
Separately, GDB said it plans to diversify into property development through its newly incorporated subsidiary GDB Development Sdn Bhd.

The proposed diversification is expected to result in the property development business accounting for at least 25% of the group’s net profit and net assets.

The proposed diversification comes as the group acquired a 6,961 sq m parcel of land in Kuching, Sarawak, and identified potential additional land banks measuring about 4,754 sq m for a proposed mixed-use development with an estimated gross development value of RM500 million, comprising serviced apartments, SOHO units and retail components.

To fund the expansion, GDB is proposing a private placement of up to 309.38 million new shares, representing up to 30% of its issued share capital, to independent third-party investors to be identified later.

The indicative issue price is 37.4 sen per share which represents an 11.16% discount to GDB’s five-day volume-weighted average market price of 42.1 sen.

The group is also proposing a rights issue of up to 205.36 million new shares, together with 205.36 million free detachable warrants, on the basis of one rights share for every seven existing shares held, with one warrant attached to each rights share subscribed.

Based on an indicative issue price of 33 sen per rights share and warrant, the rights issue price represents a 21.62% discount to GDB’s five-day volume-weighted average market price.
 
Together, the private placement and rights issue are expected to raise gross proceeds of RM70.83 million under the minimum scenario and up to RM183.48 million under the maximum scenario.

The proceeds will be used to fund the cash consideration for the acquisitions, working capital for GDB’s existing construction business and property development business, as well as expenses related to the proposals.

GDB expects all the proposals to be completed in the first quarter of 2027. M&A Securities Sdn Bhd has been appointed as the principal adviser.

GDB shares closed down half a sen, or 1.19%, at 41.5 sen on Thursday, giving the group a market capitalisation of RM423.29 million.