APB proposes acquisition of 10.41% stake in Globetronics

KUALA LUMPUR: APB Bhd has proposed to diversify into the semiconductor manufacturing and distribution business by acquiring 70 million shares representing a 10.41% stake in Globetronics Technology Bhd for RM140mil.

The share sale deal was inked with General Produce Agency Sdn Bhd and Ng Kweng Chong Holdings Sdn Bhd, to purchase their respective 6.89% and 3.52% stakes in Globetronics, it said in a stock exchange filing.

The group said the proposed acquisition will result in a diversion of more than 25% of the net asset of APB and its subsidiaries into investment in Globetronics.

“In this regard, APB will be seeking the approval of its shareholders at an extraordinary general meeting to be convened for the Proposed Diversification pursuant to paragraph 10.13 of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd,” it said.

Following the proposed acquisition, APB will emerge as the second largest shareholder in Globetronics and intends to appoint a corporate representative to the board of the company.

The cash consideration of RM2 per share for the acquisition represents a 13.6% premium to the five-day volume weighted average market price (VWAMP) of Globetronics shares of RM1.76 a share, up to and including the last practisable date.

In its rationale for the acquisition, APB said Globetronics had been paying out more than 80% of its yearly net profits as dividends over the last 10 years.

“Globetronics’s stable and high dividend payout attracted APB to invest in Globetronics Shares.

“APB is confident that its investment in Globetronics Shares will provide stable dividend income for APB in the future, thereby strengthening its cash flow and financial position,” it added.

APB also said it had a positive outlook on the Malaysian electric and electronic sector, which is expected to sustain its expansion with exports expected to reach RM629.1bil in 2023 and grow at a compounded annual growth rate of 7.9%, reaching RM867.83bil by 2027.

APB is mainly involved in the fabrication of process equipment for the oleo-chemical, oil and gas, energy and petrochemical industry.

In its fourth financial quarter ended Sept 30, 2023, the group posted a net profit of RM2.25mil, on revenue of RM18.93mil, which was a decline from a net profit of RM4.84mil and revenue of RM19.95mil in the same quarter in 2022.

The group attributed the weaker performance to a 37.1% decline in gross profit margin due to product mix, as well as a net reversal of impairment losses on trade receivables and liquidated and ascertained damages in 4Q22.