Nordic Group has entered into a sale and purchase agreement (SPA) to acquire all the shares in Eratech for $10 million on Aug 25.
The consideration comprises a cash payment of $7.0 million to be made upon completion and the remaining $3.0 million to be paid six months from the date of completion.
The SPA, which was entered into by Nordic Group’s wholly-owned subsidiary, Avitools Singapore Pte. Ltd, was completed on the same day. Following the acquisition, Eratech will be a wholly-owned subsidiary of the group.
Eratech is a company that’s mainly in the business of providing precision machining and turnkey manufacturing services.
According to Nordic Group in a statement on May 24 when it entered into a non-binding term sheet with Eratech, the acquisition is in line with its strategy to increase its range of products and services as well as penetrate new markets.
In addition, the acquisition presents the opportunity for the group to widen its range of products and services as well as to tap into new customers in the precision engineering sector. It is expected that Eratech will provide increased revenue for the group’s precision engineering division.
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Based on Eratech’s unaudited financial statements for the FY2021, the company’s net asset value (NAV) stood at $8.3 million as at Dec 31, 2021.
Under the agreement, Eratech’s net tangible assets (NTA) as at the date of completion should not be less than $8.3 million. The company’s cash and cash equivalents should not be less than $4.3 million on the same date.
In addition, Eratech should retain “sufficient working capital” of at least $4.0 million as at the date of completion to operate its business without further cash injection from Nordic Group.
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On a pro forma basis, had the acquisition taken place at the end of FY2021, Nordic Group’s NTA per share would’ve remained unchanged at 17.5 cents. However, the group’s earnings per share (EPS) for the FY2021 ended Dec 31, 2021, would have increased to 4.4 cents from 3.6 cents.
Shares in Nordic Group closed 2 cents higher or 4.35% up at 48 cents on Aug 25.
