PETALING JAYA: ACO Group Bhd has proposed the acquistiion of a 49% stake in Focus Electrical Malaysia Sdn Bhd for a total of RM7.35 million through its wholly-owned subsidiary, ACO Holdings Sdn Bhd, which will be satisfied by a combination of cash of RM5.88 million and issuance of new shares in ACO for the remaining RM1.47 million.
Focus Electrical is principally engaged in the trading of electronic, electrical goods, lighting and lighting accessories.
In a Bursa filing, the group said the proposed acquisition will enable ACO to leverage on the additional sales outlets and distribution centres of Focus Electrical.
ACO’s group managing director Tang Pee Tee @ Tan Chang Kim said the addition of Focus Electrical’s operational facilities in the East Coast region will further improve its leadership position in the distribution of electrical products and accessories industry.
“As Focus Electrical is a profitable company and the proposed acquisition is supported by a profit guarantee amounting to RM4 million for FY21 ending April 30 and RM6 million for FY22, the additional income generated from the proposed acquisition will enhance ACO’s future profitability and returns on shareholders’ funds.
Moreover, ACO will benefit from the future prospects and earnings potential of Focus Electrical, riding on its future plans to increase its number of sales outlets to further expand its market position in the state of Terengganu and Kelantan,” he said.
On top of increased geographical coverage, the proposed acquisition will also strengthen ACO’s products portfolio and enable it to offer wider range of products to meet the needs of its customers.
Upon completion of the proposed acquisition, ACO and the current shareholders of Focus Electrical will collectively inject new capital amounting to RM13 million by way of subscribing for new ordinary shares in Focus Electrical.
The capital injection will be contributed in proportion of their respective shareholdings and as a result, ACO will inject new capital worth RM6.37 million into Focus Electrical.
To finance the proposed acquisition of Focus Electrical and the subsequent working capital injection, ACO announced the proposed private placement of up to 56.5 million new ordinary shares, representing 18.83% of its total number of issued shares.
The proposed acquisition and private placement exercises are expected to be completed by the fourth quarter of 2020.
