KUALA LUMPUR (June 13): Tex Cycle Technology (M) Bhd (KL:TEXCYCL) said on Thursday it is acquiring Meridian World Sdn Bhd, which specialises in wastewater and air pollution control, for RM55 million in cash.

A binding term sheet has been signed with all 10 shareholders of Meridian World to negotiate the detailed terms and conditions of the acquisition, Tex Cycle said in an exchange filing. Tex Cycle expects to sign a definitive agreement within the next 60 days, it noted.

The proposed acquisition allows Tex Cycle to expand its product and service offerings, the company said. Further, the addition of Meridian World will also expand Tex Cycle’s geographical reach to the northern region of peninsular Malaysia, it said.

The acquisition comes as Tex Cycle pushes for acquisitions to fuel growth at a time when the company has a strong balance sheet with a net cash position.

In June 2023, Tex Cycle CEO Gary Dass told The Edge the company had already identified a few potential acquisition candidates, including industry peers that could complement Tex Cycle’s existing businesses and help accelerate its growth.

Tex Cycle said it will fund the acquisition with internally- generated funds or bank borrowings or a combination of both.

The acquisition would immediately contribute to earnings once it is completed as Meridian World comes with a profit-after-tax guarantee of at least RM12 million for the year ending December 2024 and 2025, Tex Cycle noted.

Meridian World operates a fully licensed scheduled waste recovery facility that handles everything from waste collection and transportation to the recovery of scrap metal contaminated with oil or solvents.

“Meridian World brings to Tex Cycle a profound expertise in chemical processing and scheduled waste management, perfectly complementing our core services and aligning with our sustainability objectives,” Gary Dass said in a statement on Thursday.

Shares of Tex Cycle were down 1.5% to RM1.36 on Thursday ahead of the announcement of the acquisition.