Ancom to be fully integrated chemical group through proposed acquisition
29 Apr 2021
KUALA LUMPUR — Leading manufacturer and supplier of agricultural and industrial chemicals in Southeast Asia, Ancom Bhd has proposed to acquire all the assets and liabilities of Nylex (M) Bhd for RM179.3 million, translating into RM1.00 per Nylex share.
In a statement today, the company said it represents a healthy premium over the last transacted price and volume weighted average market price (VWAMP) of Nylex shares up to and including April 27, 2021.
The premium ranges from 16.2 per cent to 31.5 per cent over the selected VWAMP period of Nylex shares.
As Ancom currently holds 50.3 per cent in Nylex, accordingly, the net consideration for the proposed acquisition payable by Ancom will be RM96.7 million, which is for the remaining 49.7 per cent stake it does not currently own.
“The net purchase consideration shall be satised via payment of RM50 million in cash, with the balance RM46.7 million fulfilled through the issuance of 31.1 million new Ancom shares at an issue price of RM1.50 per share,” it said.
Subsequent to the proposed acquisition, Ancom said Nylex will retain RM15 million cash in the company.
The balance RM81.7 million will be distributed to all shareholders of Nylex (other than Ancom) via capital reduction and repayment exercise of RM35 million cash distribution and RM46.7 million via the consideration shares at an entitlement date to be determined by Nylex.
Ancom group chief executive officer Lee Cheun Wei said through the consolidation exercise, Ancom and Nylex will become a much larger and stronger chemical group with interest spanning across the agrichemical and industrial chemical business in Malaysia as well as the world market.
“Having full control of Nylex’s business in the industrial chemicals, polymer and chemical logistics divisions would provide us more flexibility on execution of our overall strategies.
“With the completion of the exercise, Ancom will become one of the most integrated agri and industrial chemical players in the region,” he said.
He added that the consolidation exercise will also see a stronger combined balance sheet for the enlarged group and hopes to achieve its aspiration of having RM1 billion market capitalisation in the near future.
The proposed acquisition is expected to be completed by the fourth quarter of 2021.
Upon completion of the proposed acquisition and proposed distribution, Nylex will be classified as a cash company with no core business.
Accordingly, Nylex will be required to submit a proposal to the Securities Commission Malaysia for its approval to acquire a new core business within 12 months from the date of being classified as a cash company.
Ancom also announced its third quarter (3Q21) and nine months financial results today for the period ended Feb 28, 2021 (9M21).
Ancom’s 3Q21 revenue increased eight per cent year-on-year to RM389.2 million.
It said the improvement was primarily driven by the agricultural and industrial chemicals segments.
In tandem with the higher revenue, the group’s profit after tax and non-controlling interest surged some 36-fold year-on-year to RM7.1 million in 3Q21, compared to RM0.2 million a year ago.
“This is the best quarterly profit for Ancom since 4Q19. The larger-than-proportionate jump in prot was due to the greater economies of scale enjoyed as well as the lower operating cost incurred,” it added.
It recorded a net prot of RM16.3 million on the back of RM1.09 billion revenue for 9M21.