Econframe Berhad has entered into a conditional share sale agreement with ETA Industries Sdn. Bhd. to acquire 1,743,000 ordinary shares in ETA World Sdn. Bhd. representing 70.0% equity interest, for a purchase consideration of RM56 million.
Out of which RM28.1 million is to be satisfied in cash and the remaining RM27.9 million via the issuance and allotment of 30.0 million new ordinary shares in Econframe.
ETA World is a leading industrial property builder in Malaysia with 15 years of experience and track record. The company provides turnkey design and build solutions of industrial buildings such as factories and warehouses, customising each project based on its customers’ requirements and specifications. The Group has on-going projects with a contract value totalling RM191.0 million, of which RM165.6 million remain outstanding as at 31 December 2023. It holds a Grade G7 license with the Construction Industry Development Board (“CIDB”), which enables it to participate in projects tenders with unlimited value.
The Proposed Acquisition comes with a profit guarantee by the Vendor that ETA World shall achieve an audited profit after tax of not less than RM10.0 million each year for 3 years and a cumulative audited PAT of not less than RM30.0 million (“Profit Guarantee”). For its latest full year audited financial results ended 31 December 2022, ETA World delivered a PAT of RM7.6 million on the back of RM74.1 million revenue.
Econframe’s Group Managing Director, Mr. Lim Chin Horng said, “This Proposed Acquisition brings excitement to the Group as it enables us to tap into ETA World’s expertise in the construction and property development of industrial properties, enabling the enlarged Group to take advantage and ride on the favourable prospects of the industrial property market.”
The Group has also announced the proposed diversification of Econframe into construction services and property development, which includes the design, build and sale of industrial properties (“Proposed Diversification”) as the Board of Directors anticipates upon completion of the SSA, the Proposed Acquisition may potentially contribute 25% or more of the net profits of Econframe and/or result in a diversion of more than 25% of the net asset of the Group.
The Proposed Acquisition and Proposed Diversification are expected to be completed in the first half of 2024 barring unforeseen circumstances.
