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Asia Poly buys 30% stake in acrylic manufacturer GB Plas for RM15m

KUALA LUMPUR (Nov 18): Asia Poly Holdings Bhd has inked a heads of agreement to acquire a 30% stake in GB Plas Sdn Bhd for RM15 million.

Asia Poly, which is involved in the manufacturing of cast acrylic sheets, said the agreement was signed with GB Plas' managing director Gooi Chin Hooi who is currently its largest shareholder.

Gooi currently holds a 65% stake in GB Plas, followed by Ng Kar Hung with 25%, and Gooi Wen Xin and Gooi Wen Ning with a 5% stake each.

Asia Poly said both parties shall conduct due diligence in regard to the proposed acquisition, and the corporate exercise is expected to be completed by the first quarter of 2021.

According to Asia Poly, GB Plas is one of the world's leading manufacturers and exporters of extruded acrylic and plastic sheets. The company offers a complete raw material production facility from virgin resin through state-of-the-art manufacturing processes to extrude high-quality products.

The company is currently exporting to over 66 countries across Asia, Europe, Africa, as well as North and South America.

For the financial years ended Dec 31, 2019 and Dec 31, 2018, GB Plas registered total revenues of RM52.2 million and RM65.8 million respectively, it said.

Upon completion of the disposal, GB Plas will become an associate of Asia Poly. The acquisition will be funded via internally generated funds and is expected to contribute positively to the earnings of the group from financial year 2021 onwards.

"Through this acquisition, we will be able to strengthen each other's presence in our respective key markets such as Southeast Asia where GB Plas is active in, and the US and Europe markets where Asia Poly has tapped into further. The synergistic relationship between these two companies will also be explored in regard to research and development for the usage of acrylic sheets and plastic sheets in other applications, such as solar panels.

"Furthermore, given that Asia Poly's production lines are currently running at full capacity, the acquisition shall provide an immediate expansion opportunity as GB Plas' plant is currently running at a utilisation rate of between 50% and 60%. This boosts our initial plan of doubling up our production capacity to 1,600 tonnes per month by September 2021," Asia Poly executive chairman Datuk Yeo Boon Leong said in a statement today.

Meanwhile, Gooi said: "We see a rising demand for extruded acrylic and plastic sheets in Asia, the US and European markets. In fact, we are anticipating a large long-term contract from a US customer which is currently in its advanced stage of discussion.

"GB Plas will be able to tap into these markets even more efficiently through the market channels provided by Asia Poly. Just like cast acrylic sheets, we have seen a sharp spike in orders from new customers this year, thus it is important that we capture these market opportunities by having a larger combined presence through this corporate exercise."

Shares in Asia Poly closed one sen or 2.6% lower at 37.5 sen, valuing it at RM273.57 million.

http://www.theedgemarkets.com/article/asia-poly-buys-30-stake-acrylic-manufacturer-gb-plas-rm15m

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