KUALA LUMPUR (May 15): Penang-based property developer Ewein Bhd (KL:EWEIN) is acquiring a company involved in the manufacturing of racking systems and machinery for about RM32 million.

The group is buying VS Solution Services Sdn Bhd (VSS) from the firm's existing shareholders, Ooi Eng Leong, Goh Kiang Teng, Goh Yin Ze and Chew Tien Kee, said Ewein in a filing to Bursa Malaysia on Wednesday.

The group said RM16 million of the purchase price will be satisfied via the issuance of 17.98 million Ewein shares at 89 sen per share, while the remaining RM15.99 million is to be satisfied in cash.

“Upon completion of the proposed VSS acquisition, the group will have immediate access to VSS’ rackform business and client base. This will provide the group with an additional source of revenue and earnings stream for its manufacturing business,” said Ewein.

The acquisition comes with a profit guarantee of RM9.3 million for the financial years ending Dec 31, 2024 (FY2024), FY2025, and FY2026 on an aggregate basis

Ewein, which is also involved in manufacturing, expects to achieve synergies as both the group and VSS serve the electrical and electronics (E&E) industry, utilise similar raw materials and have access to an enlarged group of clients.

"Therefore, the enlarged Ewein Group will be able to negotiate for better deals with suppliers, streamline business processes, and optimise resource allocation which could potentially reduce production costs and operational expenses and ultimately boost profitability," it added.

Shares in Ewien closed one sen or 1.14% higher at 88.5 sen on Wednesday, valuing the group at RM265.39 million. The counter has fallen 24.36% year to date.