Cape EMS to acquire US-based iConn Inc for approximately RM76.6mil

KUALA LUMPUR: Cape EMS Bhd is acquiring 50,072 common stock in the United States (US)-based company iConn Inc, representing all the issued capital stock worth approximately RM76.6 million.

The company has entered into a conditional stock purchase agreement with several parties, namely Hidirlar Family Trust trustees, Rabia Hidirlar Investment Trust trustee, Turker Hidirlar and Low Kim Teck Henry for the proposed acquisition.

“Upon completion of the proposed acquisition, iConn will become a wholly-owned subsidiary of the company,” it said in a filing with Bursa Malaysia today.

It said the acquisition is in line with Cape EMS’s strategic focus on its core competency in providing electronic manufacturing services (EMS) of electronic products.

Cape EMS said it has also proposed to undertake a private placement of up to 92.3 million new ordinary shares in Cape EMS, representing up to 10 per cent of the total number of existing issued shares, excluding treasury shares, to independent third-party investors to be identified and at such issue prices to be determined later.

It said based on the indicative placement price of RM1.15, the proposal would raise gross proceeds of approximately RM106.1 million and intended to use approximately RM76.6 million to satisfy the purchase consideration of Iconn.

Looking ahead, it said the company’s overall strategy is to continue to focus on its core competency in providing EMS of electronic products, particularly industrial electronic products supported by its die casting and machining (DCM) segment.

“As part of its strategies and plans, the company plans to carry out a series of expansion plans to construct a new warehouse which incorporates automated storage facilities, set up a new cleanroom facility and purchase new automated production lines as well as new machinery and equipment to support its business expansion plans,” it said.

It said the acquisition, which is expected to be completed in the fourth quarter (4Q) of 2023, is expected to contribute positively to Cape EMS’s future earnings attributable to shareholders as it would enable to recognise the financial performance of iConn as part of the company’s consolidated financial statements.

Meanwhile, it said the proposed private placement, which is also expected to be completed in 4Q of 2023, is not expected to have any material effect on the earnings and earning per share (EPS) of Cape EMS for the financial year (FY) 2023.

However, it said there would be a dilution in the EPS of the Cape EMS group for FY 2023 due to the increase in the number of Cape EMS shares in issue arising from the proposed private placement, as and when implemented.

The iConn group is engaged in the provision of virtual electronics manufacturing solutions, comprising, among others, design for manufacturing, engineering, warehousing and sourcing services, whereby the iConn Group sources for manufacturers to carry out manufacturing of electronic components, subassemblies and complete product assemblies.

iConn is an existing customer and supplier of the Cape EMS, whereby the Cape EMS group provides EMS to iConn for technology based access points and mechanical apparatus for life science and advanced medical equipment. – BK