ADVCON (5281): ADVANCECON HOLDINGS BHD to acquire 51% stake in quarry operator
KUALA LUMPUR (Oct 26): Advancecon Holdings Bhd has received its shareholders’ nod to acquire a 51% controlling stake in quarry operator Spring Energy Resources Bhd for RM30.4 million.
In a statement on Tuesday (Oct 26), the earthworks and civil engineering services provider said the approval was given in an extraordinary general meeting.
It said the acquisition of the stake in Spring Energy would be satisfied via RM15.2 million in cash and RM15.2 million via the issuance of 33 million new Advancecon shares to vendor Fook Hua Holdings Sdn Bhd at an issue price of 46 sen per share.
It added that the new shares to be issued to Fook Hua represent approximately a 7.5% shareholding in Advancecon.
Advancecon said the acquisition reflects its strategic intent to diversify into the quarry operation business from the provision of earthworks and civil engineering services.
It explained that as at Oct 4, Spring Energy was involved in six commercial quarry operations in Selangor, Pahang and Negeri Sembilan with varying lease periods up to 2036.
Advancecon group chief executive officer Datuk Phum Ang Kia said with the construction and infrastructure sectors ramping up under the National Recovery Plan, he anticipated demand for quarry products to be on an uptrend.
“As we gain immediate access to Spring Energy’s quarry operation business, this will provide an additional stream of revenue to Advancecon.
“This acquisition will not only enhance our civil engineering capabilities with greater economies of scale due to similar nature of construction activities, but also sharpen our competitive edge, positioning us favourably for new tenders to be released under the upcoming Budget 2022 announcement,” he added.
Phum said that in the near term, the group would be able to secure supply of quarry products for its current projects in Selangor and Pahang.
“In the longer time frame, we have the opportunity to widen our reach to supply to other projects within the vicinity of the quarry sites,” he added.
At the midday break on Tuesday, Advancecon settled 1.37% or half a sen higher at 37 sen, valuing it at RM153.85 million.