SINGAPORE (July 24): ISOTeam is bolstering its regional presence with the $24 million acquisition of a clutch of six companies from Pure Group.
ISOTeam said the acquisition will expand its capability to offer the full suite of project and construction management services, on top of its existing engineering services and solutions.
Pure Group provides project and construction management services as well as commercial and retail fitting-out works in Singapore, Philippines, China, Malaysia and Thailand.
As at June 30, the total unaudited net tangible asset (NTA) of the six target companies was $4.2 million. The target companies also registered an aggregate unaudited profit after tax of $2.2 million for the period from July 1, 2017 to June 30, 2018.
ISOTeam says Peter Dodson Coney and Jonathan Peter Coney, who are the key managers of the target companies, will enter into service agreements with the company.
Under the sale and purchase agreement signed, ISOTeam will acquire Coney International's entire stake in Pure Group which owns 100% of Pure Group (Singapore); 99.9% of Pure Projects (Philippines); 100% of Pure Projects Construction Advisory Shanghai; 100% of Pure Projects Management; 100% of Pure Projects SEA and 49% of Pure Projects SEA.
The purchase consideration of $24 million is calculated based on six times the average earnings before interest and taxes (EBIT) of the target companies of $4 million from July 1, 2016, to March 31.
ISOTeam will pay sellers Coney International and key manager Peter Dodson Coney $12 million in cash while the other $12 million will be paid through the issue of 47.4 million ISOTeam warrant shares at $0.2532 each. The issue price is 1.24% higher than the volume weighted average price of $0.2501 for trades done on Tuesday.
The ISOTeam shares to be issued to Coney will be deposited with an escrow agent and only released to Coney after it fulfils specific profit targets.
To obtain 11.8 million of the shares valued at $3 million, Pure Group needs to achieve an audited consolidated profit after tax of at least $3 million from the completion date up to June 30, 2020, or if it fails to meet the target, make a cash payout equal to the shortfall.
For the remaining 35.5 million shares valued at $9 million, it needs to achieve an audited consolidated profit after tax of at least $5 million from July 1, 2020, to June 30, 2021, or make a cash payout equal to the shortfall on this target.
Besides Singapore, ISOTeam currently has a presence in Myanmar and Malaysia.
As at 11.27am, shares in ISOTeam are down 0.5 cent at 25 cents.
