Mikro MSC Bhd said it plans to diversify into the signage and interior fit-out business through the acquisition of a company in Singapore, TES Productions & Projects Pte Ltd, for RM30 million which will be satisfied via the issuance of 134.83 million new shares in Mikro MSC at 22.25 sen per share.

KUALA LUMPUR (Sep 11): Electrical equipment supplier Mikro MSC Bhd (KL:MIKROMB) said it plans to diversify into the signage and interior fit-out business through the acquisition of Singapore company TES Productions & Projects Pte Ltd for RM30 million.

In a bourse filing on Wednesday, Mikro MSC said the purchase will be satisfied via the issuance of 134.83 million new shares in Mikro MSC at 22.25 sen per share, representing a 12.6% dilution in the group's current share base of 1.07 billion shares.

The vendor of the 100% stake in TES is Calida Group Pte Ltd, whose sole shareholder and director is Lim Seng Gee.

TES is principally involved in the manufacturing of signs and advertising displays and providing general contractor services for interior fit-out.

Mikro MSC said the purchase price implies a price-to-earnings multiple of 12.24 times based on the audited profit after tax (PAT) of S$730,000 (RM2.45 million) for the financial year ended Dec 31, 2023 (FY2023).

The group said the vendor has provided a two-year profit guarantee that TES's audited PAT for the FY2024 and FY2025 will not be less than S$800,000 and S$890,000.

“In the event that TES does not achieve these guaranteed profit sums due to any reason Calida shall pay to TES in cash within 14 calendar days after the delivery of the audited financial statements of TES for each relevant financial year,” it added.

Barring any unforeseen circumstances and subject to all relevant approvals being obtained, the purchase is expected to be completed by the fourth quarter of FY2024.

Mikro MSC said its diversification into the signage and interior fit-out businesses is expected to contribute more than 25% to its net profit and may result in a diversion of more than 25% of its net assets to the new businesses.

At Wednesday’s closing, shares in Mikro MSC closed unchanged at 23 sen, valuing the group at RM246.9 million.