PTT Synergy to buy construction firm from directors for RM152 mil

• In a bourse filing on Thursday (March 30), PTT Synergy said it has inked a share sale agreement with its deputy chairman Teo Swee Leng, its managing director Teo Swee Phin and Faddly Nordin to purchase the entire equity interest in PTTSB.

KUALA LUMPUR (March 30): PTT Synergy Group Bhd (formerly Grand Hoover Bhd) is acquiring construction firm Pembinaan Tetap Teguh Sdn Bhd (PTTSB) from its major shareholders and directors for RM152 million, to grow its construction business.

In a bourse filing on Thursday (March 30), PTT Synergy said it has inked a share sale agreement with its deputy chairman Teo Swee Leng, its managing director Teo Swee Phin and Faddly Nordin to purchase the entire equity interest in PTTSB.

It is deemed a related party transaction as Swee Leng and Swee Phin have substantial stakes in Aim Tetap Teguh Group Sdn Bhd (ATTG), which controls a 52.64% stake in PTT Synergy. PTT Synergy's executive chairman also has stakes in AATG.

The RM152 million consideration is to be satisfied via RM62 million cash from bank borrowings, as well as the issuance of 81.08 million new PTT Synergy shares at RM1.11 apiece — a discount of 0.55% and 5.62% to the five-day and 30-day volume-weighted average prices of the company's share of RM1.1161 and RM1.1761 respectively.

Swee Phin will be paid RM11.32 million cash and issued 14.81 million shares, while Swee Leng will get RM13.48 million cash and 17.62 million shares; the remaining RM37.2 million cash and 48.65 million shares will go to ATTG, which Faddly has appointed as his nominee.

According to the filing, the share issuance will bump up ATTG’s stake in PTT Synergy to 55.96%, while Swee Phin and Swee Leng’s direct equity interests in the company will rise to 8.29% and 9.79% respectively.

PTT Synergy said the purchase consideration is reasonable and justified after taking into account PTTSB’s adjusted audited net asset of RM104.84 million as at end-December 2022, its historical financial performance, and outstanding order book of RM248.1 million as at March 8.

“The board (save for the interested directors) had also considered the views of BDO Capital Consultants Sdn Bhd (BDOCC), the independent adviser, in assessing the reasonableness of the purchase consideration,” the group said, noting that the adviser had assessed the fairness of the consideration using the discounted cash flow methodology (DCF).

Based on the DCF, the fair value of PTTSB ranges from RM142.4 million to RM169.9 million.

For the financial year ended Dec 31, 2022, PTTSB’s profit after tax (PAT) rose to RM16.95 million from RM13.17 million in FY2021 as revenue climbed to RM156.06 million from RM127.37 million; PAT was RM20.57 million in FY2020 when revenue was RM93.38 million.

PTT Synergy expects the acquisition to be completed by the second half of 2023.

AmInvestment Bank Bhd has been appointed as the principal adviser for the proposed acquisition, while BDOCC has been appointed the independent adviser.

Shares in PTT Synergy ended unchanged at RM1.15, giving the group a market capitalisation of RM113.85 million.