Asti Holdings, has, on Feb 26, entered into a sale and purchase agreement (SPA) with Advanced Systems Automation Limited to acquire 100% of the shareholding interest in Emerald Precision Engineering, Yumei Technologies, Yumei REIT and Pioneer Venture.
The acquisition consideration comprises a base consideration component of $12.5 million and an earn-out consideration component of $3 million.
Upon the execution of the agreement, Asti shall pay $1 million as a refundable deposit.
On the completion of the acquisition, $8.7 million owed by Advanced Systems Automation Limited will be set-off against the base consideration.
Once the agreement has been completed, the base consideration, after the earnest deposit, set-off and deferred consideration will be paid.
In addition, deferred considerations of $500,000 each will be paid on the first milestone payment date and grand milestone payment date.
The earn-out consideration will be paid if the first milestone of achieving net profit before tax of $1.5 million, and the grand milestone of achieving net profit before tax of $3 million for the FY2021 and FY2022 are met.
Advanced Systems Automation Limited is listed on the SGX-ST’s Catalist board and is in the business of manufacturing electromechanical components and parts for semiconductor and consumer electronics industries. Its sponsor is SAC Capital Private Limited.
Emerald is a Malaysian-incorporated company and has an issued and paid-up capital of RM600,000 ($197,068) comprising 600,000 shares. It is an equipment contract manufacturing services provider in Asia, with a track record in the precision machining of parts and components for semiconductor, hard disk drives and other industries. Emerald's customers are predominantly based in Singapore and Malaysia.
Yumei Technologies, which provides die-casting, plastic injection moulding components and other finishing operations incorporating precision machining, surface finishing, leakage treatment and the sub-assembly of mechanical components, has a total paid-up capital of RM500,002 over 500,002 ordinary shares.
Yumei REIT is a company that has an issued and paid-up capital of RM500,000 comprising 500,000 ordinary shares as at the date of the SPA. Yumei REIT is the asset management company for Yumei Technologies.
Pioneer Venture Pioneer Venture is a Singapore-incorporated company, which has an issued and paid-up capital of $1.1 million comprising 1,000,000 ordinary shares as at the date of the SPA.
Pioneer Venture is principally engaged in the manufacturing of fabricated metal products except for machinery and equipment. It has over ten years of experience in metal moulding technologies, manufacturing processes and integrated manufacturing solutions.
The objective of the proposed acquisition, according to Asti, is to diversify and increase the group’s revenue and help enhance profitability. The group would also be able to reduce its existing debts owed by Advanced Systems owed.
If the proposed acquisition had taken place on Jan 1, 2019, Asti’s earnings per share (EPS) would have been 2.40 cents, instead of the 1.10 cents posted.
Shares in Asti closed flat at 3.6 cents on Feb 26.
