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Fischer Tech jumps 11% on Platinum Equity's S$3.02 a share takeover offer
THE share price of mainboard-listed Fischer Tech jumped 11 per cent on Friday, following the takeover offer by Platinum Equity.
At S$3.02 a share in cash via a scheme of arrangement, the offer by Platinium - a global investment firm with US$13 billion of assets under management - values the Singapore-listed maker of precision engineering plastic components at S$168.45 million.
Fischer Tech's shares opened higher at S$2.99 each from the previous day's close of S$2.70. They hit a high of S$3.01, a whopping 110 per cent surge from the end of last year.
The offer, announced early Friday, is at "an attractive premium" of about 95.6 per cent over Fischer Tech's 12-month volume weighted average price (VWAP) of S$1.54 up to and including April 4, 2017 - the last trading day before it unveiled a possible transaction.
The acquisition is seen as "an opportunity" for Platinum to buy a complementary business in the same plastic precision engineering industry that will reinforce its geographic footprint and revenue base across diverse end-markets.
Fischer Tech manufactures and supplies plastic precision components for a wide range of products including automobiles, consumer electronics, computers and medical devices. It boasts of production facilities in Singapore, China, Malaysia and Thailand.
Once the acquisition is completed, Fischer Tech is expected to combine its business with that of Platinum Equity's portfolio company, Ying Shing Enterprises Limited. The latter was acquired by Platinum Equity in 2015, and is a vertically integrated manufacturer of precision-engineered plastic injection molded and metal stamping components. It is headquartered in Hong Kong with production facilities in Zhuhai and Suzhou.
Justin Tang, director of global special situations at Religare Capital Markets, told The Business Times that the acquisition is "the latest in a spate of private equity acquisitions in the precision engineering space".
"This is due to the consistent cash flow generation of these companies,'' he said.
Fischer Tech founder, President and CEO Peter Tan said the prospective combination with Ying Shing is the right move for the future of the business.
"Ying Shing shares our commitment to engineering excellence and will open up new opportunities for growth and expansion. Our customers will benefit greatly from the combined financial and technological capabilities."
Some shareholders holding a combined stake of 75.48 per cent have given an irrevocable undertaking to accept Platinium's offer.
Fischer Tech will be delisted on completion of the deal.