SINGAPORE (July 9): Datapulse Technology is taking another step towards its diversification into the hospitality industry – just months after it was thrust into the spotlight for buying a haircare business without proper due diligence.
In a filing to SGX late on Monday night, Datapulse announced it has entered into definitive agreements to acquire a stake in Bay Hotel Singapore at 50 Telok Blangah Road.
As at noon on Tuesday, shares in Datapulse are trading 15% lower, or down 4.5 cents, at 25.5 cents – hours after the lifting of its trading halt.
The group had called for a trading halt after market close on July 4, pending release of the announcement. Shares in Datapulse had jumped 25% to 30 cents, before the trading halt was called.
Datapulse will hold a 5% interest in the consortium for the proposed investment, with PAM Holdings II (BVI) holding the remaining 95% stake.
Datapulse’s share of the proposed $235 million investment comes up to $12.1 million, including transaction expenses, which will be funded via a combination of internal resources and bank borrowings.
The freehold 319-room hotel, located near Habourfront, will be sold with vacant possession. The consortium intends to appoint an international hotel manager to manage the hotel following the acquisition.
Datapulse says the proposed investment is in line with the group’s strategy to further expand its property business.
Over the past 12 months, Datapulse has announced at least two other hotel acquisitions.
In July last year, the group said it was acquiring the mid-scale Geo Hotel Kuala Lumpur in Malaysia.
See: Datapulse eyes acquisition of KL hotel for diversification into hospitality industry
The group then announced in October that it is acquiring a hotel located near the Myeongdong district in Seoul, Korea.
The proposed investment in the Seoul hotel was completed last month.
See: Datapulse announces diversification plans with intended acquisition of hotel in Seoul
The diversification into the hospitality industry comes as Datapulse shut down its compact discs and blu-rays discs manufacturing business.
For the nine-month period ended April 2019, the group announced a net profit of $0.45 million.
By comparison, Datapulse’s share of net profit of Bay Hotel Singapore will come up to two-thirds of that amount.
According to the filing, the hotel raked in a full year net property income of $8.0 million in 2018.
Datapulse’s recent diversification efforts include its controversial purchase of haircare company Wayco Manufacturing.
Singapore Exchange Regulation (SGX RegCo) chided Datapulse for failing to conduct proper due diligence for the transaction.
Less than a year after the $3.4 million acquisition, Datapulse then announced it was selling the haircare products manufacturer back to its original owner, Way Company, for $3.2 million – some 7.5% lower than its purchase price.
See: Datapulse to sell back haircare business Wayco just a year after acquisition
Datapulse was also embroiled in a legal tussle with three former executive directors, who demanded the company pay them an aggregate sum of $751,118.
The former directors claimed the amount was due to them as part of a profit sharing arrangement under their service agreements with the company.
See: Datapulse slapped with writ of summons by ex-directors after partial payment of claim
