Econframe to acquire 70 pct stake in ETA World for RM56 million
KLANG: Total door system solution provider, Econframe Bhd (Econframe) has entered into a conditional share sale agreement (SSA) with ETA Industries Sdn Bhd (ETA Industries) to acquire 1.743 million ordinary shares in ETA World Sdn Bhd (ETA World) representing 70 per cent equity interest, for a purchase consideration of RM56 million.
Out of this purchase onsideration, RM28.1 million is to be satisfied in cash and the remaining RM27.9 million via the issuance and allotment of 30 million new ordinary shares in Econframe.
Econframe’s Group managing director, Lim Chin Horng said, “This Proposed Acquisition brings excitement to the Group as it enables us to tap into ETA World’s expertise in the construction and property development of industrial properties, enabling the enlarged Group to take advantage and ride on the favourable prospects of the industrial property market.”
“Looking ahead, the growth in Malaysia’s manufacturing sector presents significant opportunities. This is driven by the ongoing trade tensions between
the United States and China which has led to the diversification of supply chains among several multinational companies, leading to higher demand for industrial properties, such as factories and warehouses in Malaysia.”
ETA World is a leading industrial property builder in Malaysia with 15 years of experience and track record. ETA World provides turnkey design and build solutions of industrial buildings such as factories and warehouses, customising each project based on its customers’ requirements and specifications.
The group has on-going projects with a contract value totalling RM191 million, of which RM165.6 million remain outstanding as at December 31, 2023. It holds a Grade G7 license with the Construction Industry Development Board (CIDB), which enables it to participate in projects tenders with unlimited value.
The proposed acquisition comes with a profit guarantee by the vendor that ETA World shall achieve an audited profit after tax (PAT) of not less than RM10
million each year for 3 years and a cumulative audited PAT of not less than RM30 million.
For its latest full year audited financial results ended December 31, 2022, ETA World delivered a PAT of RM7.6 million on the back of RM74.1 million revenue.
The proposed acquisition and proposed diversification are expected to be completed in the first half of 2024 barring unforeseen circumstances.