KUALA LUMPUR: Tomypak Holdings Berhad plans to takeover poly-packaging company EB Packaging Sdn Bhd through a combination of two share sales agreement with shareholders of the company that own 70 percent, and call and put options for the remaining 30 per cent interest, pricing EB Packaging at a maximum of RM105 million.
The company will fund the acquisition of the 70 per cent interest using the proceeds from the insurance compensation payment for the fire incident at its main manufacturing plant in Senai, Johor on 19 December 202 and/or bank borrowings, if required. Tomypak Holdings received RM205 million in insurance compensation payment for the fire incident.
The options will be funded via a combination of bank borrowings and internally generated funds.
Tomypak entered into conditional share sale agreements with Siow Chew Kiong, Teo Kee Lin, Hoo Jik Heng and Teo Peng Hong for a 29.29 per cent interest in EB Packaging for RM30.76 million; and RMCP Plastics Holding Sdn Bhd for a 40.71 per cent equity interest for RM42.74 million
The company has also entered into several call and put options with Siow, Teo Kee Lin, Hoo and Teo Peng Hong to purchase the remaining 30 per cent in EB Packaging for a maximum amount of RM31.5 million in three tranches over a period of three years, starting from the financial year ending 2023.
Tomypak Holdings will not be obliged to complete the sale and purchase of the shares in EB Packaging should any of the shareholders back out of the deal.
EB Packaging, which was established in 1995, manufactures and sells flexible plastic packaging materials such as stretch & pre-stretch films, industrial packaging, protective packaging (bubble wraps & polyethylene foams) together with a wide range of adhesive tapes. It currently has manufacturing plants in Batu Pahat and Bandar Tenggara in Johor, Malaysia.
The principal markets for EB Packaging's products are Malaysia, Singapore, and Indonesia.
Tomypak Holdings said the fire Incident in its main manufacturing plant in Senai severely affected the operations of the company and it has sourced for alternative revenue and profitability streams to complement its manufacturing capability at its newly retrofitted manufacturing plant in Tampoi, Johor.
It said the proposals will allow Tomypak Holdings to acquire EB Packaging, a well-established player in the flexible plastic packaging industry and increase its market share in the flexible plastic packaging industry given that Tomypak Holdings and EB Packaging have different types of customers.
Tomypak Holdings' customers are mainly food and beverage manufacturers while EB Packaging's customers are from various industries, namely food, electronics, industrial packaging, building materials, furniture, garment, medical (healthcare) and logistics.
"Therefore, the proposed acquisition will allow the Tomypak Holdings and EB Packaging to tap into each other's customer base. In addition, since EB Packaging is already income-generating and profitable, the proposals will enhance the Tomypak Holdings' earnings with the consolidation of EB Packaging's financial results after the completion of the proposed acquisition, " the company in its filing with Bursa Malaysia.
The proposals are expected to be completed in the fourth quarter of 2023.
Tomypak shares were trading at RM0.435 a piece after it resume trading following a halt pending the announcement.