T7 Global to buy remaining 49% stake in T7 Wenmax

PETALING JAYA: T7 Global Bhd has proposed to acquire the remaining 49% equity interest in its partially owned subsidiary, T7 Wenmax from Megaxus Resources Sdn Bhd for a cash consideration of RM39.2 million via its wholly-owned subsidiary, T7 Gastec Sdn Bhd.

Following the acquisition, T7 Wenmax will be a wholly-owned subsidiary of the group.

According to the group’s Bursa filing, the consideration sum of RM39.2 million was arrived at on a willing-buyer willing-seller basis, calculated based on the PE multiple of approximately 7.72 times to the 49% of the company’s latest audited profit of tax as at the financial ending Dec 31, 2019 of approximately RM10.36 million.

In addition, T7 Global has also adopted an enterprise value to earnings taxation, depreciation and amortisation (EV/EBITDA) multiple as a secondary method to cross check the primary method, which has translated into a multiple of 5.17 times.

It explained these two methods to be the most appropriate method of valuation for T7 Wenmax which is involved in the trading and supplies of industrial equipment, machineries, spare parts and lubricants oil.

In light of the company’s ongoing contract, the group elaborated that the acquisition will allow full control over business operations and it may potentially increase T7 Global’s net profit as well as expanding its offerings across the oil and gas industry with a wider range of products.

Currently, T7 Wenmax has 17 active and on-going projects with an outstanding order book of approximately RM400 million, which can sustain its business for approximately 4 years, with that T7 Global is optimistic of its financial performance in the near future.

It revealed that the cash settlement for the acquisition will be satisfied with 24 monthly interest free payments.