Na­tion­wide Ex­press pro­poses to buy Air­pak

> Plans to merge courier op­er­a­tions through RM33.16m ac­qui­si­tion

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Na­tion­wide Ex­press Courier Ser­vices Bhd (NECSB) is propos­ing to merge its courier busi­ness with Air­pak Ex­press (M) Sdn Bhd via a pro­posed ac­qui­si­tion of Air­pak for RM33.16 mil­lion.

In a fil­ing with Bursa Malaysia yes­ter­day, NECSB said it had en­tered into a con­di­tional share ac­qui­si­tion agree­ment with Ong Eng Lee and Lim Kew Wan to ac­quire the en­tire is­sued and paid-up share cap­i­tal of Air­pak.

The pur­chase con­sid­er­a­tion will be sat­is­fied with RM30 mil­lion cash, and the is­suance and al­lot­ment of 6.32 mil­lion new or­di­nary shares of 50 sen each in Na­tion­wide Ex­press Hold­ings Bhd (NEHB) at an is­sue price of 50 sen per share, which is equiv­a­lent to RM3.16 mil­lion.

Air­pak is prin­ci­pally in­volved in courier ser­vices while its sub­sidiary Air­pak Freight & Lo­gis­tics Sdn Bhd is in­volved in the busi­ness of freight and seafreight ser­vices. The group has a net­work of 58 ser­vice points through­out Malaysia.

“The pro­posed ac­qui­si­tion is part of NECSB’s over­all strat­egy to cap­i­talise on the rapid growth in de­mand for ecom­merce and on­line busi­ness ac­tiv­i­ties. With the grow­ing num­ber of new on­line mar­ket places, the pro­posed ac­qui­si­tion is timely for the com­pany to build its ca­pa­bil­i­ties and ca­pac­i­ties in the busi­nessto-con­sumer seg­ment and thereby, en­hance rev­enue growth from the ecom­merce last mile de­liv­ery ser­vices,” the com­pany said.

The com­pany would also stream­line and ra­tio­nalise re­sources within the two groups, en­abling the en­larged group to ben­e­fit from po­ten­tial cost sav­ings, im­prove busi­ness ef­fi­cien­cies and achieve economies of scale.

The pur­chase con­sid­er­a­tion was ar­rived at af­ter tak­ing into ac­count the prospects of courier ser­vice in­dus­try in Malaysia, fu­ture earn­ings po­ten­tial and po­ten­tial syn­er­gis­tic ben­e­fits to NECSB and its sub­sidiaries as well as a profit guar­an­tee by Ong.

Ong guar­an­teed that Air­pak and its sub­sidiary shall have an ag­gre­gate au­dited con­sol­i­dated net profit of RM5 mil­lion each for two fi­nan­cial years end­ing July 31, 2017 and 2018.

In the event that the guar­an­teed net prof­its are not achieved, Ong will make good the profit short­fall by pay­ing the short­fall amount into Air­pak.

The pro­posed ac­qui­si­tion will be funded through in­ter­nally gen­er­ated funds and/or bank bor­row­ings. It is con­di­tional upon in­ter alia, the com­ple­tion of a pro­posed in­ter­nal re­or­gan­i­sa­tion ex­er­cise, which NECSB is in the midst of.

The pro­posed ac­qui­si­tion is ex­pected to be com­pleted by the first quar­ter of 2017 and con­trib­ute pos­i­tively to the fu­ture earn­ings and EPS of NECSB for the fi­nan­cial year end­ing March 31, 2017 on­wards.

The pro­posed ac­qui­si­tion is sub­ject to ap­provals of Bursa Se­cu­ri­ties and share­hold­ers of NECSB or NEHB.

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