KUALA LUMPUR: Citaglobal Bhd has received shareholders’ approval to acquire Citaglobal Engineering Services Sdn Bhd (CESSB), which is pursuing projects worth RM1.66 billion, from Tiza Global Sdn Bhd for RM140 million.
Citaglobal group executive chairman and president Tan Sri Mohamad Norza Zakaria’s stake in the CESSB will increase to 47.03% from 16.51% upon the completion of the exercise.
Norza is the sole director and sole shareholder of Tiza Global. Given his interests in both Citaglobal and CESSB, the consolidation of his private engineering and construction related assets will mitigate conflicts of business interests as a major shareholder of Citaglobal.
Norza said the proposed acquisition addresses the existing and potential conflict of interests and promote better corporate governance for Citaglobal, Tiza Global and him in aligning the interests of Citaglobal and CESSB in securing order books for the engineering and construction division.
“CESSB will be a key business driver for Citaglobal moving forward,” Norza told reporters at a press conference after its EGM here today.
The proposed acquisition comes with a net profit guarantee of RM60 million over three financial years, beginning from Citaglobal's financial year ending Dec 31, 2022 (FY22) to FY24.
With the completion of this proposed acquisition, Citaglobal's order book will increase 30% from RM754.5 million to RM984.7 million.
The proposed acquisition is expected to be completed by the fourth quarter of 2022.
Shareholders also approved the proposed consolidation of every five existing Citaglobal shares into one Citaglobal share on an entitlement date that will be determined at a later period.
Moving forward, Citaglobal is keen to participate in developing 5G telecommunication towers across the country.
“CESSB is a licensed network facilities provider with experience in installation and erection works. Citaglobal plans to participate in certain identified projects within the construction and telecommunications sector, which requires high value-added services,“ said Norza.
At present, CESSB has yet to commence its telecommunication business to own or provide network facility, except for being appointed as contractor for network development and maintenance for telecommunication company.
Citaglobal yesterday has also inked a collaboration agreement with Genetec Technology Bhd to develop battery energy storage management systems for renewable energy sources.
Both parties will enter into a definitive agreement within one month, with a special purpose vehicle to be formed at a 50:50 shareholding.
Norza said the collaboration marks its entry into the renewable energy industry, which will be an important growth area for the group moving forward.
“Battery energy storage management is just one of the renewable energy segments we are looking into,” he added.
Citaglobal's current businesses include civil engineering and construction, oil & gas, and manufacturing. The group intends to transform into a conglomerate involved in renewable energy, facilities management, telecommunications, infrastructure and technology sectors.
