Advanced Systems Automation has entered into a conditional sale and purchase agreement (SPA) with Samuel Ong Chee Ming, Roland Ong Toon Wah and Alan Leung Wing Lun for the 100% acquisition of Excelgames Interactive Asia Holdings for a base consideration of $120 million.
Of the amount, $114 million will be satisfied through the allotment and issuance of new shares in the capital of Advanced Systems at the implied issue price of about 16.33 cents per share.
The implied issue price is calculated based on a formula (see below).
The remaining $6 million will be paid in cash.
Should Excelgames meets one of the profit targets set out under the SPA, Advanced Systems will pay Samuel, Roland and Leung the additional sum corresponding to the target.
Excelgames is a video game company with operations in Singapore and Hong Kong. The company sells, markets and distributes video games and video game-related hardware and software online and offline. It also operates an e-sports arena.
The acquisition, once completed, will result in a change in control of Advanced Systems and would constitute a reverse takeover (RTO) under SGX-ST’s Catalist rules.
The proposed acquisition will also be subject to the approval of Advanced Systems’ shareholders, which will be sought at the group’s extraordinary general meeting (EGM).
The acquisition came about due to the significant disruptions faced by the group’s business operations due to the Covid-19 pandemic.
As such, the group’s board decided to dispose of certain subsidiaries in February. It also decided enhance its revenue by acquiring a profitable business.
Upon completion of the disposal, the group will cease to hold any operating businesses and will become a cash company.
As such, it had been exploring the acquisition of new businesses.
Excelgames, according to Advanced Systems in a June 9 filing, is a profitable business, which has good growth potential in the gaming industry.
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It is also helmed by an experienced management team with in-depth experience in the gaming industry.
Samuel, Roland and Leung come with a combined 49 years of experience in the gaming industry. Samuel is considered a key pioneer in the industry, while Roland has localised games such as World of Warcraft and Fifa Online. Leung was previously the CEO of Hao Fang Esport Platform, a subsidiary of Shanda Interactive Entertainment, the leading interactive entertainment media company and online game publisher in China.
As at June 9, Excelgames has an issued and paid-up share capital of $700,003 comprising 700,003 ordinary shares, which Samuel Ong owns 100% of.
Following the completion of the acquisition, Samuel, Roland and Leung will carry out a restructuring exercise in Advanced Systems and will hold 100% of the enlarged issued and paid-up shares in the capital of Excelgames after the restructuring exercise.
In addition, the SPA has stipulated that Advanced Systems seeks an irrevocable letter of undertaking from each of the undertaking shareholders, Seah Chong Hoe and Dato’ Michael Loh Soon Gnee, where they are not to dispose of their shares in Advanced Systems unless the SPA is terminated, or the day following the completion of the post-completion placement.
The undertaking shareholders are also to vote in favour of the proposed acquisition at the company’s EGM.
As at June 9, Seah and Loh hold 6.5 billion shares representing 29.12% in Advanced Systems, and 4.44 billion shares representing a 19.91% stake, respectively.
The acquisition is expected to be completed within 14 days upon the satisfaction of all of the conditions under the SPA.
Shares in Advanced Systems closed flat at 0.1 cent on June 9.
