SINGAPORE - Systems integration solutions provider Nordic Group is looking to buy Envipure Pte Ltd for $14 million to $15.5 million.
The group said on Wednesday that its wholly owned subsidiary, Nordic Flow Control, had entered into a non-binding term sheet with the seller, Sunalps, to acquire all the shares in Envipure.
Envipure and its subsidiaries, Envipure Sdn Bhd and Pollution Control Asia, provide turnkey engineering solutions in process, industrial plant and environmental engineering services, air pollution control, odour abatement, and water and waste-water treatment.
Nordic Group said the proposed acquisition will allow it to widen its range of products and services as well as to penetrate new markets and tap new customers in the semiconductor and environmental engineering sectors.
If acquired, Envipure is also expected to provide Nordic Group with a more stable income stream from Envipure's maintenance contracts which are typically for one-year durations.
Nordic Group will finance the purchase through internal funds and bank borrowings.
The proposed acquisition is subject to the approval of the directors and shareholders of Nordic Group, Nordic Flow Control and Sunalps.
It is also conditional upon, among other things, Nordic Flow Control being satisfied with the results of the due diligence to be conducted by Sunalps on the legal, financial and other affairs of Envipure.
The consideration was negotiated between Nordic Flow Control and Sunalps, taking into account factors such as the net tangible assets (NTA) and earnings of Envipure.
Envipure's NTA stood at around $11.1 million as at Dec 31, 2018.
Of the purchase price, an amount equivalent to the cash and cash equivalent at Envipure's bank on the date of completion of the acquisition, not less than $8 million but up to $10 million, will be payable when the transaction is completed. The remaining balance will be payable six months from the completion.
Nordic Group emphasised on Wednesday that there is no assurance that the proposed acquisition will proceed or be completed, as the term sheet is not legally binding.
The company will make an announcement upon the signing of definitive agreement(s).
Shares of Nordic Group closed at 25.5 cents on Tuesday, down 0.5 cent or 1.92 per cent.