KUALA LUMPUR: Logistics company Taipanco Sdn Bhd is slated to list on Bursa Malaysia via a reverse takeover (RTO) of Transocean Holdings Bhd, a company of similar business.
Taipanco started operations in 2004 with only 10 trucks. Today, its fleet has expanded to more than 200 trucks, plying goods in and out of Northport and Westports in Port Klang.
Transocean Holdings Bhd, in its filing with Bursa Malaysia today, said it is buying Taipanco for RM140 million to revitalise its business.
Transocean said it will issue 102 million new ordinary shares and 38 million new redeemable convertible preference shares (RCPS), both priced at RM1 each.
Transocean is buying Taipanco by inking a conditional sale and purchase agreement and a profit guarantee agreement with the company’s shareholders and directors Jee Chau Hau, Nazari Akhbar and Nor Rahah Ab Ghani (the vendors).
The vendors will have 55.25 per cent of the enlarged issued share capital of Transocean and 64.64 per cent upon full conversion of the RCPS, effectively emerging as major shareholders in Transocean, resulting in a RTO.
They will also be obliged to undertake a mandatory takeover (MGO) of the company to acquire the remaining shares not held by them.
However, as it is not their intention to do so, they will seek an exemption from undertaking a MGO from the Securities Commission.
The vendors will also grant Transocean a profit guarantee that Taipanco’s profit before tax for 2017, 2018 and 2019 shall not be less than RM10 million each and the cumulative amount for the three years shall not be less than RM33 million.
“Based on the profit guarantee of not less than RM10 million audited consolidated profit before tax for 2017, the purchase consideration represents an implied price earnings ratio of 14 times,” the filing said.
“However, the board noted the average profit guarantee of RM11 million from 2017 to 2019 based on the profit guarantee of a cumulative audited consolidated of not less than RM33 million. The purchase consideration represents an implied price to earnings ratio of 12.73 times based on the average profits,” it said.
The vendors will be undertaking a placement of not less than 23 million of the consideration shares to independent third party investors at a later date.
In view of Taipanco sizeable container transit yards in Northport and Westports, the proposed acquisition represents a strategic opportunity for Transocean to strengthen its logistics division.
Transocean noted that its financial performance has been deteriorating over the past four years and the proposed acquisition would enable it to revitalise its business.