FoundPac proposes to buy 75% stake in DSSB for RM16.5mil

PETALING JAYA: Precision engineering parts fabricator and supplier FoundPac Group Bhd has proposed to acquire a 75% stake in laser stencil company Dynamic Stencil Sdn Bhd (DSSB) for a total cash consideration of RM16.5mil.

The proposed acquisition of DSSB comes with a profit guarantee of not less than the aggregated guaranteed profits of RM9mil over a period of two years.

This means that the proposed acquisition is expected to be earnings-accretive and shall contribute positively to the future earnings of FoundPac, going forward.

In a Bursa Malaysia filing yesterday, FoundPac said the proposed acquisition would be funded via internally-generated funds and will be a 75%-owned subsidiary of the company upon completion of the transaction.

“The proposed acquisition is an opportune venture for FoundPac to market laser stencils, which serve as a complementary component to be marketed to FoundPac’s customers.

“Concurrently, FoundPac may also cross-sell its products to DSSB customers.

“The group’s long-term growth plan includes growing its semiconductor business, as well as expanding its business portfolio into other viable and income-generating businesses,” said FoundPac.

The group also believes that the additional revenue contribution from DSSB will also provide FoundPac with an additional stream of earnings, which is expected to enhance the group’s profitability and returns on shareholders’ funds.

“Leveraging on DSSB’s good track record for the past three years and the aggregate guaranteed profits made for the guarantee period of two years, the board is optimistic that the prospects for the coming years would be positive,” added FoundPac.

As of May 31, 2017, DSSB’s net profit amounted to RM1.9mil and the company had net assets of RM5.02mil.

The proposed acquisition is expected to be completed by the fourth quarter of 2017.