Leather upholstery and car seat manufacturer, Pecca Group Berhad is entering the medical supplies industry with a major acquisition of Rentas Health a private limeted business for RM100 million.
Rentas is primarily involved in COVID-19 test kits and personal protective equipment including face masks, coveralls, jumpsuits, face shields, hand sanitizer and disinfectant, the proposed acquisition by Pecca of 204,000 ordinary shares will represents 51% equity interest.
Pecca had showed interest in diversifying its business when it announced of allocating RM5 million in June this year into its new healthcare segment and with the acquisition the group is embarking on a long term strategy in the business.
As of end May Rentas Health recorded PBT of RM9.34 million for the 11-month which represents an increase of
approximately RM5.76 million or 160.89% as compared to RM3.58 million for the financial period from April 2019 to end June 2020. The significant increase in PBT was primarily due to the increase in revenue coupled with higher profit margin on the sales of COVID-19 test kits during the financial period under review.
The terms of acquisition stipulates that the purchase consideration shall be satisfied via a combination of 50% or RM50 million value will be from issuance of 11,990,400 new Pecca Shares at an issue price of RM4.17 per Pecca Share credited as fully paid up to be issued and allotted on the completion date and the balance 50% of the purchase acquisition of RM50 million will be in the form of cash consideration to be paid upon receiving confirmation by the independent auditors that the PAT of Rentas Health for the FYE 2022 is no less than RM23 million. The vendor will provide a guarantee of a PAT of no less than RM23m for the financial year ending 30 June 2022.
Price to earnings of the acquisition is approximately 8.53 times based on the Profit Guarantee and 51% equity interest to be acquired by Pecca, which is lower than the median and average PE Multiple of all companies categorised under Kuala Lumpur Healthcare Index of 17.48 times and 23.06 times respectively.
- Pecca has stated the rational behind the acquisition is to increase its presence in the healthcare sector, by extending its product range and providing additional revenue stream to the Group. Also to tap into existing customer base and distribution networks of Rentas Health to attain a wider customer outreach and to achieve business synergy between Pecca’s existing healthcare business and the new business.
- Group Managing Director, Datuk Teoh Hwa Cheng believes the demand for masks, PPE and other covid products will be here to stay as more officials describe COVID19 as an endemic, similar to the likes of HIV and Hepatitis C. To strategic move is for the group to maintain its competitive edge.
