Mega First to acquire packaging film manufacturer Stenta for RM205m
25 May 2021
Mega First Corp Bhd (MFCB) plans to acquire the entire stake of Stenta Films (M) Sdn Bhd for a total cash consideration of RM205 million or 99.33 sen per share.
In its filing to the exchange today, MFCB said that Stenta is one of the leading flexible packaging film manufacturers of Biaxially Oriented Polypropylene Film (BOPP) and Linear Low Density Polyethylene films (LLDPE) in Malaysia.
The products cater for a variety of applications for food, beverages, pharmaceutical, medical, surgical gloves and fast-moving consumer goods (FMCG) packaging.
Currently, its products are exported mainly to Asia, Middle East, Africa, South America and Europe.
Stenta began its operations in January 1993 and currently operates two factories adjacent to each other in the industrial town of Bandar Baru Bangi, Malaysia.
Meanwhile, MFCB said that is currently engaged in the manufacturing and selling of flexible packaging products, mainly for the food and beverage and other FMCG products, through its subsidiary Hexachase Flexipack Sdn Bhd (HFSB), a unit of its packaging division.
HFSB currently purchases its plastic film requirements, a key input material, from a wide range of domestic and overseas plastic film suppliers, including Stenta.
The board believes that moving into upstream plastic film manufacturing is essential to secure the long-term survival of the business and to support the growth of HFSB’s downstream converting business.
“Stenta is a well-managed company with a long-proven history of quality, service and profit track record. The proposed acquisition will provide Mega First with an immediate platform to venture into upstream activities with an established and well-diversified global customer base,” it said.
The acquisition of Stenta will immediately contribute positively to the revenue and profit of the group, it added.
MFCB said the offer is subject to the receipt of acceptance from the shareholders of Stenta agreeing to sell in aggregate at least 70% of the issued and paid-up capital of Stenta.
In the event that the acceptance rate is below 100% but at least 70%, MFCB agrees to grant to the remaining minority shareholders, a put option to sell their shares to MFCB.
As of May 24, MFCB has received a total acceptance amounting to 154.78 million ordinary shares of Stenta, representing 75% of the issued and paid-up capital of Stenta.
MFCB intends to fund the acquisition through a combination of internally-generated funds and bank borrowings.
The acquisition is not subject to the approval of the shareholders. However, the acquisition may be subjected to other regulatory authorities of Malaysia, if required.
The board expects the sales and purchase agreement (SPA), and if applicable, the option agreement, to be executed and completed by July 2021.
MFCB’s counter closed unchanged at RM6.96 today, for a market capitalisation of RM3.44 billion. There were 257,000 shares traded.