KUALA LUMPUR, May 17 — Kumpulan Perangsang Selangor Bhd’s (Perangsang Selangor) unit, Perangsang Dinamik Sdn Bhd, is acquiring a 100 per cent stake in integrated plastic injection moulding firm, Toyoplas Manufacturing (Malaysia) Sdn Bhd, for RM311.25 million.
The group has entered into a conditional share sale agreement with Toyoplas Consolidated Ltd for the proposed acquisition, which is expected to be completed by the third quarter of 2019.
In a statement Friday, Perangsang Selangor noted the deal required vote of approval from its shareholders, to be sought at an extraordinary general meeting to be convened soon.
The purchase of the plastic products manufacturer will be fully funded by a combination of equity and term loan, each amounting to RM161.25 million and RM150.0 million, respectively.
The deal marks Perangsang Selangor’s second, yet bigger entry into the plastic injection moulding business after CPI (Penang) Sdn Bhd.
“In addition to this acquisition being value-accretive and cash generating, Toyoplas Manufacturing is chosen for its excellence in quality,” Perangsang Selangor managing director and group chief executive officer Ahmad Fariz Hassan said.
The proposed acquisition was made based on the long-term prospects of the global plastic injection moulding market, which was valued at US$326 billion (US$1=RM4.17) in 2018.
The growing demand for plastic components from various underlying industries, including packaging, home appliances, automotive and medical devices, is anticipated to sustain the growth.
Toyoplas Manufacturing operates seven manufacturing plants spanning over one million square feet of space across three countries, namely Shanghai, Dongguan and Nanning in China; Ulu Tiram, Muar and Senai in Malaysia; and Jakarta in Indonesia.
In addition to enhancing business focus, Ahmad Fariz stressed that the acquisition would unlock the full potential of the group’s plastic injection moulding business.
Toyoplas Manufacturing and its subsidiaries have recorded stable revenue growth with a compound annual growth rate of 5.8 per cent between 2015 and 2018, while expanding its profitability margins.
It closed the 2018 financial year with a revenue of US$109.1 million.
Upon the completion of the acquisition, Toyoplas Manufacturing is expected to contribute positively to Perangsang Selangor’s financial performance from the third quarter ending Sept 30, 2019 onwards.
In ensuring a smooth transition with the change of owners, Perangsang Selangor will maintain the superior quality that Toyoplas Manufacturing had consistently delivered to its customers throughout the years.
“The bolt-on acquisition of Toyoplas Manufacturing is a quintessential example of the group creating further value to its shareholders by enlarging the earnings base, ultimately generating sustainable and greater returns for all its stakeholders,” Ahmad Fariz said. — Bernama