KUALA LUMPUR: Tex Cycle Technology (M) Bhd has proposed to acquire a water waste and air pollution control company, Meridian World Sdn Bhd for RM55 million in cash.
A binding term sheet has been signed with all 10 shareholders of Meridian World to negotiate the detailed terms and conditions of the acquisition, Tex Cycle said in an exchange filing.
Upon completion of the proposed acquisition, Meridian World will become a wholly-owned subsidiary of the Company.
The 10 shareholders are namely Yang Wu-Hsiung, Amia Co Ltd, Beltrax Engineering Sdn Bhd, Good Credentials Sdn Bhd, Panbright Holdings Sdn Bhd, Peninsular Accord Sdn Bhd, Scientidex Sdn Bhd, Sunrise Majusama Sdn Bhd, Wong Mei Hwa and Yang Chueh-Kuang (collectively, the Vendors).
Tex Cycle expects to sign a definitive agreement within the next 60 days, it said in a filing to Bursa Malaysia today.
The company and its subsidiaries believe that the proposed acquisition will allow the company to broaden its product and service offerings.
"This expansion includes chemical processing of waste, wastewater treatment facilities, waste recycling services, and the trading of industrial chemicals," it added.
The acquisition is expected to bring synergistic benefits since both companies operate in the same industry—recovering and recycling scheduled waste.
Additionally, the acquisition will expand Tex Cycle's geographical reach.
Meridian World, is primarily based in the northern region of Peninsular Malaysia, giving Tex Cycle immediate access to new markets, a broader client base, and ongoing and future projects.
Tex Cycle expects the acquisition to increase its revenue and earnings, providing a new stream of recurring income. This will enhance profitability and shareholder value, offering better earnings visibility and strengthening the company's financial position over the long term.
Tex Cycle's share price was down about one per cent to RM1.36 a share at midday.