KUALA LUMPUR (Oct 19): Cosmos Technology International Bhd (KL:COSMOS) has proposed to acquire a 51% stake in electronic manufacturing services (EMS) player Orisystems Opto Sdn Bhd for RM16.52 million to be paid for in shares.
In its bourse filing on Monday, the group said it has entered into a non-binding letter of intent with Akil Ahmad Ishaq and Othman Ali for the acquisition of the stake, comprising 510,000 shares, in Orisystems.
Akil and Othman are directors and substantial shareholders of Orisystems.
Cosmos said the indicative purchase consideration of RM16.52 million will be satisfied via the issuance of 33.05 million new Cosmos shares at 50 sen per share.
The price represents a premium of 27.71% or 10.85 sen over Cosmos’ five-day volume weighted average market price of 39.15 sen as of Oct 16.
According to Cosmos, Orisystems has guaranteed a profit after tax of not less than RM3.6 million annually for the financial years ending Dec 31, 2027 (FY2027) to FY2029, representing an aggregate profit guarantee of RM10.8 million.
Cosmos noted that the indicative purchase consideration translates into a price-to-earnings multiple of nine times based on 51% of the guaranteed profit for each financial year.
Incorporated in 1992, Orisystems is involved in manufacturing electronic parts and components for general and aerospace applications, as well as general trading and product packaging.
Cosmos said the acquisition provides the group an opportunity to broaden its business portfolio while expanding its footprint into a complementary market segment.
"Through the proposed acquisition, we will gain immediate access to Orisystems' existing operations, allowing us to venture into the EMS industry without having to establish the necessary operational capabilities and resources organically from the outset," it added.
The deal is subject to due diligence, board and shareholder approvals, business diversification, and Bursa Malaysia’s approval for the consideration shares
Both parties are expected to execute a definitive agreement within six months or such extended period as mutually agreed.
Shares of Cosmos Tech closed 1.5 sen or 3.75% higher at 41.5 sen on Monday, giving the group a market capitalisation of RM105.45 million.