SINGAPORE - Mainboard-listed corporate services provider Boardroom plans to buy subsidiaries of a Malaysian company in the same line of business.
Boardroom inked a conditional share sale agreement on July 13 with Symphony House Group, it said in an announcement on Monday morning (July 16).
It will pay about RM164.1 million (S$55.6 million) for the Symphony Corporatehouse unit and three wholly owned subsidiaries, which offer accounting and payroll services, share registration, and issuing services for primary market securities offerings, among other businesses.
About RM123.3 million - or about three-quarters of the price - will be paid in cash, funded by external borrowings.
The rest is to come from the issuance of 16 million new shares at 86.5 cents apiece, or a premium of 15 per cent over the three-month volume-weighted average price up to July 12.
Symphony House would become the second-largest shareholder in Boardroom after the deal, with a 7.63 per cent stake, behind Boardroom parent G. K. Goh Holdings' 87.4 per cent interest through the GKG Investment Holdings vehicle.
Boardroom noted in its announcement on the Singapore Exchange (SGX) website that Malaysian operations already made up 9.8 per cent of group revenue for the year to Dec 31, 2017.
"The proposed acquisition is in line with the group's regional growth and expansion strategy," it said. "Through a combination of the Malaysian subsidiaries and the target companies, the proposed acquisition will enable the group to expand and strengthen its business presence in Malaysia within a short span of time. The target companies will also be able to realise and further their growth potential in the region by leveraging the group's well-established network across the Asia-Pacific."
Boardroom group chief executive Kim Teo said in a media statement that the proposed acquisition was "a mutually beneficial partnership for two highly complementary and well-established businesses", while Abdul Hamid Sheikh Mohamed, group executive director of Symphony House, called it "a win-win situation for both parties as we can leverage each other's expertise and resources to enhance our service offerings for our clients".
Mr Hamid also said: "Boardroom provides an immediate entry point and springboard for Symphony House into the regional markets with its established network across the Asia-Pacific."
The net profit of the Symphony House units was about RM8.86 million for the year to March 31, based on unaudited pro forma consolidated financial statements, according to Boardroom; their pro forma net asset value was some RM15.4 million. Boardroom added that, on a pro forma basis, its Malaysian revenue after the acquisition would roughly triple.
The completion of the deal is subject to conditions such as Boardroom getting both shareholder approval and the go-ahead from the SGX for the listing and quotation of the consideration shares that it plans to issue to pay for the companies.
Symphony House also needs the approval of the Securities Commission Malaysia over the change in shareholding for the primary market securities services subsidiary, which holds a capital markets and services licence.
Boardroom last closed on July 13 at 77 cents, up by 4.05 per cent on the previous day.