The deal enables the TEE to gain entry into the telecommunications engineering industry and leverage on the companies’ engineering capabilities and to tap the South East Asian market.
TEE International Limited (“TEE” or the “Group”), an SGX Mainboard listed Engineering and Integrated Real Estate and Facilities Management group, through its 50% owned joint venture company CMC Communications Sdn Bhd (“CMC”), announced the acquisition of the 80% interest in Trisilco Folec Pte Ltd (“TFPL”) together with its subsidiary,
Trisilco Folec Philppines Inc (“TFPI”,) , and Keppel Communications (Thailand) Co., Ltd (“KCT”) (collectively referred to as the “Wireless Group”) for the purchase consideration comprising cash of S$791,000 and S$639,000 respectively taking into account the cash at bank and less certain payables of TFPL Group and KCT for the period ended 30 April 2011. In addition to the purchase consideration, CMC will also pay in cash from time to time, the certain contingent amounts which are equivalent to the receivables accruing to the TFPL Group and KCT as at 30 April 2011 (including but not limited to accounts receivables of approximately S$3.9 million and S$96,000 of TFPL Group and KCT respectively), of which, payment is contingent upon actual receipt by the TFPL Group and KCT of such receivables from third parties.
Consequently, upon the completion of the Wireless Group, TEE has an effective interest of 40% in each of TFPL Group and KCT, held through CMC. As such, the Wireless Group has become an indirect subsidiary of the Group.
The Wireless Group is well-established in the telecommunications engineering industry and has been involved in the telecommunications industry in the cellular space within the infrastructure engineering; outdoor and in-building management, program management and design engineering; IT services and outsourcing; and broadband wireless solutions.
The strategic acquisition of the majority stake in the Wireless Group is aimed at gaining an incipient entry into the telecommunications engineering industry as well as strengthening TEE’s competitive edge across the South East Asian region especially in Thailand and Philippines. In addition, this strategic acquisition leverages on TEE’s well-established and growing competencies in the infrastructure engineering services, according to a TEE International.
Elaborating on the rationale of the acquisition, Mr C.K. Phua, Group Chief Executive and Managing Director, said: “The Wireless Group has a well-known reputation with a strong track record and is an engineering and program management icon recognised by industry players in the countries they are in.”
“This acquisition enables us to leverage on their established business network in the South East Asian region, which will put us in an attractive position and allow us to further expand both horizontally and vertically in the value chain,” said Mr Phua.
Whilst growing the Group’s existing engineering business is a key focus, TEE will also benefit from the strong business synergy to scale up its engineering capabilities to provide a total turnkey telecommunications solution ranging from planning, engineering, and construction management to program management.
“With the Wireless Group on board, our engineering business will be enhanced and this will enable us to become an integrated total engineering solutions provider, by demonstrating the wide range of skills set that spans across various industries,” concluded Mr Phua.
CMC acquired 400,000 ordinary shares in the capital of TFPL, representing 80% of the issued share capital; and 572,700 ordinary shares and 765,000 preference shares in the capital of KCT representing 80% of the voting rights of KCT. The considerations for both acquisitions were arrived on a willing-buyer, willing-seller basis and were computed based on the earnings before depreciation, amortisation, interest and after income tax of TFPL Group and KCT for the financial year ended 31 December 2010. As at 31 December 2010, the net tangible assets of TFPL Group and KCT were approximately S$3.4 million and S$1.1 million respectively. Both acquisitions were financed by internal funds.
The acquisition of the Wireless Group is not expected to have any material impact on the consolidated earnings per share and the net tangible assets per share of the Group for the current financial year ending 31 May 2012. None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the acquisitions, save for their shareholdings in the Company.
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