Ancom diversifies into livestock chemicals business via RM24m acquisition
28 Dec 2021
Agricultural and industrial chemical group Ancom Bhd is diversifying into the manufacturing of chemical and animal health products.
The group has proposed to acquire an 80% equity interest each in Shennong Animal Health (Malaysia) Sdn Bhd and Vemedim Sdn Bhd (collectively known as Shennong Group) for a total of RM23.92 million.
Shennong Group is principally involved in the manufacturing and trading of chemical and animal health products which encompass livestock-related antibiotics, feed additives, supplements, and disinfectants mainly for the domestic market.
“We are excited to expand our market footprint in the agricultural chemicals space from our core plant-related chemicals to include livestock chemicals,” Ancom Group CEO Lee Cheun Wei said in a statement.
He said this is in line with Ancom’s goal to position itself as an integrated solutions provider in the food supply chain.
“Overall, the proposed acquisition is a synergistic move for us. As Shennong Group is also involved in the agricultural chemicals business, we see synergistic benefits where we could leverage on our distribution network to boost the market reach of our new addition,” Lee added.
The proposed acquisition comes with an earnings guarantee of RM4.6 million in profit after tax per year for 2022 and 2023.
“At the moment, Shennong Group mainly serves the domestic market, but with Ancom’s experience, resources as well as extensive geographical footprint in more than 40 countries, we are confident in elevating the new business to a higher level.
“We look forward to working closely with the founders of Shennong Group, who will maintain their 20% stake in the company and continue to play an active role in the growth of the business,” Lee said.
Shares in Ancom finished 18 sen or 6.14% higher at RM3.11 on Tuesday (Dec 28), valuing the group at RM802 million.
Source: The Edge Markets