KUALA LUMPUR: Artroniq Bhd has entered into a conditional sale and purchase agreement to acquire a 60 per cent stake in precision engineering company Fujim Digital Sdn Bhd (FDSB) for RM12 million.
Artroniq's managing director and chief executive officer Chin Yew Thong said the company is looking forward to the completion of the acquisition of FDSB, which will put it into the precision engineering business.
"The acquisition will help the company to reduce its reliance on a single business and provide a new income stream as it aims to participate in the robust growth of the engineering support services industry," said Chin in a statement.
The information, communication, and technology (ICT) business is currently Artroniq's sole revenue contributor following the cessation of its operations in the manufacturing business of resin compounds for wire and cable and resin compounds for other industries in September 2020.
The acquisition entails the acquisition of 156,000 ordinary shares in FDSB from Teoh Boon Thiam, which will be satisfied via RM6 million in cash and the balance via the issuance of new ordinary shares of the company.
Artroniq is also proposing to diversify its existing principal activities to include precision engineering.
The diversification exercise is required following the proposed acquisition to facilitate the company's venture into the new business.
"The alternative income stream for the company will help to rejuvenate the recovery in the post-Covid era for Artroniq.
"I am optimistic that the shareholders share similar excitement as the management on the potential of the high precision machinery industry and vote in favour of the acquisition during the upcoming extraordinary general meeting," Chin said.
FDSB shareholder Teoh Boon Thiam said the acquisition would help accelerate the company's expansion plan.
"The precision engineering industry has a robust growth outlook and will see huge demand as the global economy recovers from the pandemic," he added.
In July 2022, FDSB was included as an approved vendor to tender for new contracts with three multinational companies operating in the automotive (China), lighting (Europe), and semiconductor and microchip industries (the US).
Going forward, FDSB is also looking to expand its product offerings to cater to customers in the oil and gas industry.
This will allow the company to tap into a wider customer base and create a more sustainable income stream.