Mega First to acquire Emery Oleochemicals’ Asia Pacific unit
Malaysia’s Mega First Corporation Berhad, a diversified group of companies with three main divisions – Renewable Energy, Resources and Packaging, is acquiring Emery Oleochemicals (M) Sdn Bhd and Emery Specialty Chemicals Sdn Bhd, the 50-50 joint venture companies of Sime Darby Plantation Bhd (SDP) and PTTGC International Pte Ltd.
According to Mega First Corporation’s filing with Bursa Malaysia, the acquisition will be executed by Edenor Technology Sdn Bhd, a joint venture company jointly incorporated by Mega First Corp Bhd and 9M Technologies Sdn Bhd to undertake the proposed acquisition. 9M Technologies is a private limited company in Malaysia with business in investments, mergers and acquisitions, and technical advisory services.
In Fiscal Year 2020, Sime Darby impaired its investment in Emery Group by MYR236 million (USD55 million). As of December 31, 2020, the carrying amount of the Emery Group was MYR157.9 million (USD37 million). Sime Darby’s share of net loss in Emery Group as of the first half of Fiscal Year 2021 was MYR30 million (USD7 million).
The transaction, which is valued at MYR38 million (USD9 million), is derived from an enterprise value of MYR243 million (57 million), less the target net debt of MYR205 million (USD48 million). The final amount will be subject to adjustments based on the companies’ net working capital and net debt position upon completion of the deal.
In a separate filing, Sime Darby Plantation pointed out that the divestment is conditional upon the restructuring of Emery Group into separate standalone groups in respect of its business in Asia Pacific, North America and Europe.
Post restructuring, Emery’s companies in North America and Europe will be transferred to Sime Darby Plantation and PTTGC with a 50-50 direct stake via Emery Oleochemicals UK Ltd.
Mega First Corp. said the acquisition is in line with its talent recruitment objective which will help its plantation division’s core technical capabilities when it expands into coconuts and other agricultural produce processing in two to three years.
It revealed that the group is investing MYR20 million (USD4.7 million) for its 50% in Edenor’s paid-up capital through internally generated funds.
In the event that Emery’s existing lenders do not consent to a change in control, the group will utilise its existing stand-by credit facilities of up to MYR255 million (USD60 million) to pay off Emery’s lenders.
