By Sherilyn Goh
Bursa-listed property developer Tiger Synergy Bhd inks a Memorandum of Understanding (MoU) to acquire BPE Synergy Engineering Sdn Bhd (BPE), a Malacca-based semiconductor company via a share swap totaling RM16 million of purchase consideration.
The acquisition will see Tiger Synergy diversifying its earnings base to include the semiconductor business, which it said will also be a synergy to its existing property business as BPE will be able to provide smart home technology to its property units, a value-add to its customer base amid the softening property market.
“Going forward, we intend to offer value-added properties with smart technology by capitalising on the competency and experience of BPE Synergy Engineering Sdn Bhd.
“We believe this business diversification would contribute positively to the company’s future earnings and improve the financial position via additional revenue and earnings contribution from semiconductor-related activities,” said Tiger Synergy’s executive chairman William Tan Wei Lian.
Under the share swap arrangement, Tiger Synergy will acquire all 1.8 million ordinary shares of BPE in exchange of issuance and allotment of 200 million of its ordinary shares at 8 sen per share, which will see BPE becoming the wholly-owned subsidiary of Tiger Synergy, whereas BPE will hold a 10% stake in the group.
Based on the MoU, 50% of Tiger Synergy’s consideration shares will be subjected to a three-year moratorium period from the completion of the share swap, whereas the rest are freely tradeable without any imposed moratorium.
Established in 2012, BPE specialises in design and assembly of printed circuit board (PCB), as well as mechanical design, fabrication, assembly and board repairing services for the semiconductor industry. Its clientele include names like NXP, Texas Instruments, Infineon, Intersil and Cohu.
With 90% of its operations focused in Malaysia, BPE said it is looking at expanding into Thailand, Philippines and Vietnam, while the acquisition by Tiger Synergy will provide it with the financial capability to do so.
“The acquisition by Tiger Synergy offers us an opportunity to leverage on the rapid transition in the property industry in the region. Besides boosting BPE’s financial position, we hope to maintain our position as key player in the industry by complementing and enhancing Tiger Synergy’s overall offerings,” said BPE’s managing director Kon Qi Yao.
The MoU also entails a profit guarantee on the part of BPE of at least RM2 million per financial year for three consecutive financial years upon the completion of the share swap, which is expected by the end of first half this year.
This, according to Tiger Synergy’s managing director Shirley Tan Lee Chin, is expected to bring the group’s revenue for financial year ended June 30, 2016 to RM4o million, which will be an 200% year-on-year increase from RM15.142 million recorded in its corresponding period last year. Of that, BPE is expected to contribute RM18 million (40%) to group revenue.
For its financial year ended June 30, 2015, Tiger Synergy slipped into the red after posting a nett loss after tax of RM2.05 million, a 245% decrease from the nett profit of RM1.409 million recorded the previous year.
Tiger Synergy said it is expecting to launch property projects worth RM500 million in gross development value (GDV) over the next two years.
Existing projects include 132 units of three-storey semi-detached houses in Alam Impian expected to be launched in the second quarter this year with a GDV of RM260 million, a 120-unit apartment in Gombak with a GDV of RM54 million, and another 120-unit condominium in Cheras with estimated GDV of RM72 million.
It also has future projects in Seri Kembangan and Bukit Serdang expected to be launched in 2017, with combined GDV of RM700 million.
At 2pm, Tiger Synergy was trading unchanged at 9 sen per share.
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