United Envirotech, Memstar tumble on acquisition plan
REUTERS - Shares in United Envirotech tumbled as much as 13 per cent to a four-week low on Tuesday after the company announced its plans to acquire assets from Memstar Technology, whose shares were headed for their biggest daily decline in nearly five months.
United Envirotech, a membrane-based water treatment solution provider, agreed to acquire certain assets from Memstar and a 100 per cent stake in Memstar Pte. Ltd, a wholly owned subsidiary of Memstar, for a total of $293.4 million.
The acquisition will help United Envirotech become an integrated solution provider in Singapore's competitive water treatment market, analysts said. But its share price dropped to as low as $0.89, before paring some losses to $0.96 by 10.24am Singapore tiem.
"The acquisition is mainly funded by shares, so even though in the long term it will be positive, in the near term you'll have to bear with a huge EPS (earnings per share) dilution,"said Tan Ai Teng, an analyst at DBS Vickers.