KUALA LUMPUR: Propel Global Bhd is buying a 51 per cent stake in Best Wide Engineering (M) Sdn Bhd (BWE) for RM7.82 million.
In a statement yesterday, the oil and gas support services provider said BWE provides engineering and technical works for the oil and gas (O&G) industry through engineering, procurement, construction and commissioning (EPCC).
BWE's shareholders and directors are Azizi Alias, with 45.8 per cent equity interest, Jasniazrin Shah Mohd Hata, with 44.2 per cent equity interest and Tan Siew Lee, with 10 per cent equity interest.
Propel Global is acquiring the 51 per cent stake from Azizi, who is selling his entire equity interest, and Tan, who is selling 5.2 per cent of his holdings.
Propel Global group chief executive officer Angeline Lee said the acquisition aligns with the company's strategy to grow the O&G business by expanding its offerings and enhancing its market presence as an O&G engineering services provider.
"BWE's expertise and experience in EPCC works to complement the company's existing O&G business."
"We believe that combining the core competencies of BWE with the company would enable the latter to bundle a broader range of service offerings to its customers and provide it with a competitive edge over competitors.
"The company will also be able to tap into BWE's existing customer base for cross-marketing opportunities and additional revenue stream," she said.
As part of the share sale agreement, Propel Global has also entered into a put-and-call option agreement with Jasniazrin and Tan that requires the company to purchase up to 49 per cent of the remaining equity interest in BWE from them.
Consequently, Jasniazrin and Tan will grant Propel Global the right during the call option period that requires them to sell up to 34 per cent equity interest in BWE to the company.
Propel Global said BWE, which has 15 ongoing contracts with a total unbilled contract value of RM21.8 million expected to be realised over the next three years, is guaranteeing a profit of RM2.4 million and RM2.6 million in net profit for the financial year ended November 30, 2022 (FY22) and FY23 respectively.
BWE reported revenue of RM18.6 million and a net profit of RM178,000 for FY19, RM19.0 million in revenue and RM395,000 net profit for FY20 and RM38.5 million in revenue and RM2.3 million net profit for FY21.
Currently, BWE has a tender book of RM41.3 million.