Hextar Industries gets shareholders’ nod to acquire Hextar Fertilizer for RM480m, triggers mandatory takeover by parent company

KUALA LUMPUR (Oct 12): Hextar Industries Bhd (HIB) has received shareholders’ approval to acquire the entire equity interest in Hextar Fertilizers Ltd (HFL) from Hextar Holdings Sdn Bhd (HHSB) for RM480 million, it said in a bourse filing.

HHSB is the parent company of HIB and HFL; it holds a 45.7% stake in HIB, besides owning 100% of HFL.

Through this acquisition, HFL will become a wholly-owned subsidiary of HIB.

The purchase will be satisfied via an issuance of 1.6 billion new shares in HIB at an issue price of 30 sen a share.

The issuance of shares will result in HHSB’s shareholdings increasing from 45.7% to 77.3%, triggering a mandatory takeover offer that will be facilitated by M&A Securities Sdn Bhd.

HHSB will undertake a selldown of its shareholdings in HIB via an offer for sale to independent investors to be identified, to ensure that the latter complies with the minimum public spread requirement of 25%.

Datuk Eddie Ong Choo Meng, the major shareholder and director of HIB and HHSB, said the injection of the HFL comes with a profit guarantee of an aggregate of RM94 million over two years, thus providing assurance of HIB's profitability in the near term.

“HIB’s enlarged capital base following the issuance of the consideration shares will also be in line with the increase in the scale of our operations,” said Ong in a separate statement.

HIB’s group managing director Benny Ang Sui Aik said the acquisition will immediately increase production capacity from the current 75,000 metric tonnes of fertiliser per annum to 679,000 metric tonnes per annum.

“This provides us with the scale to expand our presence in the domestic market and to tap the wider export markets through HFL group’s strong global network. Our business is driven by volume. Hence, by being able to increase our capacity eight fold through the acquisition, we have significantly increased our competitiveness. We would also be able to tap the capital markets to fund our enlarged operations,” said Benny.

HIB, which is listed on the ACE Market, is involved in three main business segments, namely manufacturing and distribution of fertilisers, supply of heavy equipment tools, and provision of temporary cooling solutions and equipment for events.

HIB shares settled unchanged at 48 sen a share on Wednesday (Oct 12), giving it a market capitalisation of RM551.01 million.