1. Hextar Global announced the acquisition of a 100% interest in the Nobel Group of Companies for RM105m in a move to widen its footprint in the specialty chemicals sector.

2. In March this year, the Group acquired the Chempro Group of Companies for RM138m. This acquisition will also come with an annual profit guarantee, at a slightly higher RM14m per year over the next 3 years. View of this earnings-accretive deal positively.

• The Nobel Group of Companies manufactures and supplies chemical derivatives, coating and related products. It provides high performance custom-made anti-tack rubber lubricant and coatings for the rubber industry. Its customers include some of the world’s largest rubber glove manufacturers.

• The acquisition will cost RM105m in cash and comes with a cumulative 3-year profit guarantee of RM42m, or a profit after tax guarantee of RM14m per annum until year-end December 2023. Two companies will be acquired – Nobel Synthetic Polymer Sdn Bhd and Nobel Scientific Sdn Bhd. Funding will be via a combination of internally-generated funds (RM50m) and borrowings (RM55m). While the Group’s gearing will rise to 1.0x pursuant to the acquisitions of Chempro and Nobel, we are not overly troubled given its strong operational cash flows.

• Approvals will be required from shareholders, though not likely to be an issue as well given the earnings-accretive nature of this transaction. The deal is expected to be completed by early September 2021.

• The Nobel Group of Companies will complement the recently acquired Chempro Group of Companies. While the coming 3 years will see a cumulative RM27m net profit contribution (before interest costs) from the guarantees. The Group will continue to pursue its acquisition-led strategy to drive growth, though also expanding the reach on its cashflow-strong bread-and-butter agrochemical business. 

• Enra Kimia Sdn Bhd (EKSB) and its subsidiaries supply specialty chemicals, catalysts and odorants, as well as provide ancillary services for these products to the oil and gas and petrochemical industries. Countries of coverage are Malaysia, Australia and New Zealand. It is also an exclusive agent to 12 international principals, serving close to 85 products and is one of the largest distributors of specialty chemicals and catalysts for the oil and gas industry in Malaysia. More importantly, it is licensed to conduct business with the Petronas Group of Companies.

• Further to the Company’s announcements on 23 July 2021 and 30 July 2021 respectively in relation to the Proposed ENRA Kimia Acquisition, the Board of Directors of Hextar wishes to announce that Hextar has, on 2 August 2021, entered into a conditional Share Sale Agreement with Ekopintar Sdn Bhd and Enra Energy Sdn. Bhd. for the acquisition of Enra Kimia Sdn. Bhd. (“ENRA Kimia”), at the Purchase Consideration of RM50,000,000 to be fully satisfied by cash ("Proposed ENRA Kimia Acquisition").