KUALA LUMPUR (May 5): ES Ceramic Technology Bhd, a manufacturer of hand molds for rubber glove makers, has offered to acquire Evermix Concrete Sdn Bhd for RM83 million in a bid to diversify into manufacturing and trade in building materials.
In a filing, ES Ceramic said the acquisition will be satisfied via a combination of RM65 million in cash and the remaining RM18 million will be paid for in new ES Ceramic shares, at a price of issuance of 32 sen per share.
After the acquisition, Evermix, which is mainly involved in the manufacture and supply of chemicals and building materials, including ready-mixed concrete, will become a wholly owned subsidiary of ES Ceramic with a stake of 70%. The remaining 30% will be held by Euroceramic Technologies Co Ltd — ES Ceramic’s subsidiary in Thailand.
Lim Ming Jee is Evermix’s largest shareholder, owning 49% of the company, while Tan Boon Sing and his wife Stella Teo Moi Lin own 37.25% and 13.75% respectively.
The proposed acquisition comes with a profit guarantee of at least RM11 million for the two years combined. After the acquisition and realization of the profit guarantee, the sellers’ aggregate interest in ES Ceramic will increase to 10.02%.
The purchase price represents a price/earnings ratio of 15.1 times, based on a guaranteed average profit of RM5.5 million per year.
Evermix recorded a net profit of RM2.98 million for the year ended 31 December 2021 (FY21), compared to RM4.05m in FY20 and RM5.4m in of exercise 19.
ES Ceramic said the cash consideration will be financed by internal funds.
“As a result of the proposed acquisition, it is expected that Evermix’s construction materials manufacturing and trading business could potentially contribute 25% or more to the group’s net profit and/or result in a diversion of 25 % or more of the group’s net assets towards the business.
“As such, pursuant to Rule 10.13(1) of the Listing Requirements, the Company is required to obtain the approval of its shareholders at an Extraordinary General Meeting (EGM) for the proposed diversification,” said rated ES Ceramic.
The proposed acquisition is expected to be completed in the second half of 2022.
ES Ceramic’s share price closed down 1.5 sen or 4.35% at 33 sen on Thursday (5 May), bringing it a market capitalization of RM167 million.