Signature to acquire 23.67 per cent stake in Fiamma for RM180 million
KUCHING: Signature International Bhd (Signature), Malaysia's leading public listed kitchen cabinet manufacturer, has proposed to acquire 23.67 per cent stake in Main Market listed company Fiamma Holdings Bhd (Fiamma) for a total cash consideration of RM180 million, to tap into Fiamma's extensive nationwide coverage on distribution and servicing network of home and kitchen electrical appliances which will synergise with Signature's kitchen cabinet and whole house customiation business.
A filing with Bursa Malaysia showed that the Group had entered into a conditional share sale agreement (SSA) with the major shareholder of Fiamma, namely Lim Choo Hong to acquire 120 million ordinary shares or 23.67 per cent equity interest for the acquisition based on the purchase consideration of RM1.50 per share.
On a separate note, Divine Inventions Sdn Bhd, a private entity controlled by Datuk Seri Chiau Beng Teik's family, entered into a Share Sale Agreement with Lim Choo Hong to purchase 30 million ordinary shares or 5.92 per cent equity interest in Fiamma at RM1.50 per share. Collectively, Signature International and Divine Inventions will own a total of 29.59 per cent equity interest in Fiamma upon completion of the acquisition.
Signature said the sale and purchase of the Fiamma shares, which is expected to be completed within 4 months from the date of the SSA, will be funded via a combination of internally generated funds and bank borrowings.
Listed on the Main Market of Bursa Malaysia, Fiamma is principally an investment holding company, whilst its subsidiaries are principally involved in trading and services; property development; and investment holding and property investment.
Fiamma's trading and services segment, which is its largest revenue contributor, is involved in the distribution and servicing of home and kitchen electrical appliances, sanitaryware, builtin kitchen and wardrobe system, medical devices and healthcare products.
Meanwhile, Fiamma's property development segment is involved in the development of residential and commercial properties in the Central and Southern Regions of Malaysia whereas its investment holding and property investment segment is involved in the letting of investment properties.
Fiamma has been profitable since its listing in 1997 and recorded an annual audited profit after tax of between RM27.72 million and RM35.92 million over the past 3 financial years.
Commenting on the latest corporate exercise, Signature International Berhad Managing Director Chiau Haw Choon said: “The proposed acquisition is in line with the Group's objective of acquiring strategic stakes in profitable companies within the industry supply chain for future growth.
“Fiamma and its subsidiaries' main business which is home and kitchen electrical appliances, owns many respectable in-house brands such as Elba, Faber, Rubine, Tuscani and Haustern.
“They have an extensive nationwide coverage on distribution and servicing network of home and kitchen electrical appliances which will add value and synergy to the Signature group.
“Fiamma also hold distribution rights for international brands of medical devices and healthcare products namely Braun, Speed Queen, Omron and Beurer.
“We have observed exciting prospects in this company, which has seen a significant uptick in demand for its products due to the Covid-19 pandemic.
“The impact of various movement restrictions imposed has led to a change in the home appliance consumption trends, as more people spend time indoors, seek to increase the quality of their lifestyle at home, and gain more interest in cooking and baking.
“This has in turn resulted in the increase in demand for electrical household products and accordingly increased the sales in Fiamma's trading and services segment.”
He added that the Malaysian consumer electronics industry produced RM38.59 billion worth of products in 2021, which was an increase from RM35.63 billion in 2020.
Going into 2022, the local consumer electronics industry is expected to continue to recover and reach RM44.01 billion.