SINGAPORE - Aerospace engineering firm JEP Holdings announced on Wednesday that it has entered into an agreement to fully acquire one of its suppliers JEP Industrades (JEPI), in a bid to cut costs and expand its foothold in the cutting tool market.
"The purchase consideration comprises the issue and allotment of 120 million shares in the group. As part of the agreement, the group will receive S$1 million in dividends, paid from the earnings of JEPI," JEP Holdings said in its announcement on Singapore Exchange.
"Once the payment of this dividend has been completed, JEPI's subsequent net profit after tax would then be paid back to its original shareholders, up to a maximum payout of S$4 million over the period of financial year 2016 to 2018."
Chief executive of JEP Holdings Joe Lau noted that the vertical integration will help reduce costs for both parties while expanding the group's revenues streams.
JEPI, which markets cutting tools to clients in aerospace and oil and gas industries, had net tangible assets of around S$7.1 million as at June 30.