KUALA LUMPUR (Sept 10): AT Systematization Bhd, which recently called off its offer to take over Asdion Bhd, has now proposed to acquire 25.93% in component and packaging manufacturer D’Nonce Technology Bhd for RM64.96 million cash.
The acquisition of 81.2 million D’Nonce shares prices the target company at a whopping 80 sen per share.
Earler, shares of D’Nonce plunged at the final minutes of trading today, closing down 6.5 sen or 10.92% at 53 sen per share.
The offer is at a premium of 27 sen or 50.94% to the counter’s last close. Interestingly, shares of D’Nonce had never exceeded 65 sen apiece since its listing in 2006.
For the proposed acquisition, AT Systematization has entered into a share sale agreement with vendors Blackstream Investments Pte Ltd and Scoria Pte Ltd, which each own 21.67% and 4.26% of D’Nonce respectively.
The acquisition price represents a price-to-book ratio of 1.78 times, as well as historical price-to-earnings ratio of 18.16 times, the filing added.
On the rationale for the acquisition, AT Systematization pointed to its nature of business as an integrated designer and manufacturer of industrial automation systems and provision of precision engineering solutions.
D’Nonce, meanwhile, is involved in end-to-end packaging and design solutions; precision polymer engineering services catering to the electrical and electronics (E&E) segment; cleanroom and contract manufacturing services; and complete box-build assembly services.
“In this regard, the proposed acquisition is expected to reap business synergy by working together between both groups of companies, such as to complement one another’s knowledge and resources to develop new products and markets, improve distribution networks and customer reach,” AT Systematization said.
D’Nonce, which changed its financial year end to April 30, 2020 from Dec 31, 2019, has been profitable since 2H2019 save for a loss-making quarter in 2020. In FY21, the group booked a net profit of RM13.5 million or 4.61 sen on revenue of RM182.9 million, representing a net margin of 7.4%.
The group is also in a net cash position, taking into account cash equivalents of RM40.83 million against total borrowings of RM35.15 million. Retained earnings stood at RM17.53 million as at end-April.
In March this year, AT Systematization proposed a conditional voluntary takeover offer to Asdion Bhd at 50 sen per share, but withdrew the offer in August as Asdion is in the midst of undertaking a debt settlement with its creditors and a 20% share placement.
Shares of AT Systematization settled down half a sen or 8.33% to close at 5.5 sen, valuing the group at RM233.26 million.
Meanwhile, D’Nonce share price settled at 53 sen, giving it a market capitalisation of RM165.96 million.