Straits Inter Logistics targets 55pc Tumpuan Megah stake

KUALA LUMPUR: Straits Inter Logistics Bhd plans to acquire 55 per cent interest, or 8.25 million shares, in Tumpuan Megah Development Sdn Bhd for RM35.75 million.

In a statement yesterday, the oil trading and bunkering company said the acquisition would be satisfied via a cash payment of RM7.80 million and the remaining RM27.95 million via an issuance and allotment of 116,458,333 new ordinary shares at an issue price of 24 sen a share.

Straits Inter Logistics group managing director Datuk Sri Ho Kam Choy said the board backed the proposed acquisition of Tumpuan Megah as the company had similar core business activities.

“The profit guarantee also provides assurance on the earnings potential of Tumpuan Megah, which is expected to contribute positively to the company’s profitability on a consolidated basis,” he said.

Ho said the proposed deal was a horizontal acquisition to acquire a peer with the intention of expanding bunkering services and oil trading. The purchase is expected to enhance the group’s revenue and earnings.

“The proposed acquisition would enable Straits Inter Logistics to expand its fleet size and asset base from two to nine vessels. With the expansion of its asset base, the company would be capable of undertaking higher volume of bunkering services and increasing its operational capacities,” he said.

Ho said the proposed acquisition would also enlarge its customer base, allowing the group to capture a larger market share.