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Datapulse appoints Ernst & Young to review Wayco acquisition
DATAPULSE Technology on Thursday commissioned a strategic review of the Malaysian factory at the heart of a contentious shareholder tussle, it said that same day.
It has appointed Ernst & Young Solutions LLP (EY) to advise it on the options available for the sales and distribution capabilities of a personal care product manufacturer that the company acquired in December 2017.
Datapulse's S$3.5 million purchase of Wayco Manufacturing (M) Sdn Bhd, from Way Company, marked a foray into a brand new business for the digital media storage maker.
The move came hot on the heels of a fresh board's appointment, in the wake of a change of controlling shareholder.
But the deal also prompted a query from the Singapore Exchange - to which Datapulse replied, in an eight-page statement, that it did not conduct proper due diligence on the deal because the new CEO was a former employee of the target company and familiar with the business.
Wayco's products are sold through Way Company and Wayco Trading (M) Sdn Bhd, and the board of directors said in its latest announcement that Datapulse intends to continue to sell Wayco's products to - and keep working with - the two entities "to ensure business continuity".
But the board added that it also intends to review and evaluate the options available for Wayco to develop its sales and distribution capabilities in the mid to long term.
This would include the possibility of Wayco developing sales and distribution channels on its own, or taking over existing channels through an acquisition of Way Company and/or Wayco Trading.
As part of the strategic review, EY will hold a desktop market assessment of the Wayco business in Malaysia and Singapore, and, if relevant, the business of Way Company and Wayco Trading.
EY will also carry out a benchmarking analysis and a scenario analysis of the company's strategic options, said the Datapulse board.
The board noted that it has obtained a buyback undertaking from Way Company that requires the vendor to buy the business back at the same price, in the event of any material adverse findings in relation to Wayco.
"The company expects that the strategic review may be of some relevance or use in assisting the company to assess the applicability of such buyback undertaking," the board said.
It added that Datapulse will provide further updates to shareholders when there are material developments on the strategic review.
The family of the Datapulse co-founder Ng Khim Guan has called for both a halt to diversification and the ouster of the newly appointed board that had rubberstamped the move.
Mr Ng's daughter, Ng Bie Tjin, and the family investment vehicle, Uniseraya Holdings, have a combined stake of 16 per cent in Datapulse and have requisitioned an extraordinary general meeting to put the issue to the vote before minority shareholders.
The board has since said that it will call two such meetings by Feb 26 - one to vote on the board change, and the other to vote on the diversification.
Datapulse closed down by 0.5 Singapore cent, or 1.39 per cent, at S$0.355, before the latest announcement.
News of the strategic review came just a day after the board proposed a one Singapore cent per share special dividend on the disposal of Datapulse's media storage manufacturing site in Tai Seng.