KUALA LUMPUR: Citaglobal Bhd (formerly known as WZ Satu Bhd) has proposed to acquire the entire equity interest in Citaglobal Engineering Services Sdn Bhd (CESSB) for RM140mil.
In a statement, Citaglobal said it entered into a share purchase agreement (SPA) with TIZA Global Sdn Bhd for the proposed acquisition of CESSB via the issuance of 736.84 million new shares in Citaglobal at an issue price of 19 sen per share.
The proposed acquisition comes with an aggregate net profit guarantee of RM60mil for three full financial years ending 2022, 2023 and 2024.
In conjunction with the proposed acquisition, Citaglobal is proposing to undertake the proposed share consolidation to consolidate every five Citaglobal held by the shareholders of Citaglobal into one Citaglobal share after the completion of the proposed acquisition.
This will lead to a corresponding upward adjustment in the trading price of Citaglobal shares and may reduce the volatility of the trading price.
“In line with the objectives and strategy of Citaglobal to deliver sustainable growth and value creation to the shareholders, the proposed acquisition will enable the group to capitalise on the resources, expertise and strength of the enlarged CESSB group in securing projects and contracts, thereby enhancing and strengthening the order book, financial position and prospects of the enlarged Citaglobal group,” executive chairman & president Tan Sri Mohamad Norza Zakaria said in a statement.
“Furthermore, the settlement of the purchase consideration via issuance of consideration shares will allow Citaglobal to enhance its engineering and construction segment without any immediate impact on the cash flow and gearing levels of the group.
“In addition to providing an opportunity for Citaglobal group to bolster its earnings stream, the profit guarantee will also contribute positively to the earnings of the enlarged group which in turn creates value for the shareholders of Citaglobal,” he added.
CESSB has a total confirmed order book of RM193mil comprising construction, network construction and related projects, and sand mining operations.
Meanwhile, Citaglobal has an existing orderbook of RM539mil as of March 31. Coupled with CESSB group’s orderbook of RM193mil, Citaglobal will thus have a total orderbook of RM732mil.
Barring any unforeseen circumstances, the proposed acquisition is expected to be completed by the third quarter of 2022. The proposed share consolidation is expected to be completed by the fourth quarter of 2022.