Singapore-listed rubber company Halcyon Agri Corporation said on Monday that it will acquire Malaysian natural rubber producer Chip Lam Seng for RM63 million (S$25.67 million).
Chip Lam Seng operates two natural rubber factories in Ipoh, Malaysia, with a combined annual production capacity of 180,000 tonnes. They were built in 2004 and 2008.
The addition of the new factories will more than double Halcyon's annual production capacity to more than 300,000 tonnes and provide more scope for production growth.
This will allow Halcyon, listed on the Catalist board here, to establish itself as a major natural rubber producer in Malaysia and in Palembang, Indonesia - where its two factories are located.
The proposed acquisition will be financed through internal resources, bank borrowings and/or other fund-raising exercises, said Halcyon. The deal is expected to be completed in the fourth quarter of this year.
Last month, businessman and angel investor Koh Boon Hwee bought a 12.12 per cent stake in Halcyon through Credence Partners, a fund he co-founded and leads. Mr Koh, a former chairman of DBS Bank and Singapore Airlines, took up a $20.7 million share placement in Halcyon.
Halcyon executive chairman and chief executive Robert Meyer said: "We see significant scope to realise value for Halcyon Agri shareholders from this acquisition, with the application of our expertise in raw material sourcing, increasing the production of higher grades of rubber, applying Halcyon Agri's business model to secure resilient margins and leveraging on our sales and marketing expertise to reach our targeted top tier customers."
He also said that Halcyon views the Chip Lam Seng acquisition as an ideal platform to explore Malaysian investments.
Moreover, the two Chip Lam Seng factories are located in close proximity to two of the major ports in Malaysia which enjoy excellent infrastructure.
Halcyon received a query from the Singapore Exchange on its high trading activity last Friday before it requested a trading halt pending the release of the announcement.
Its share price reached an all-time high of $1.005, before closing up 15.8 per cent at 99 cents on Friday.
The company asked for the trading halt to be lifted on Monday night.
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