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OIL blending firm USP Group Limited has signed a conditional sale and purchase agreement to buy Supratechnic Pte Ltd in a bid to diversify the former's business.
The consideration for the acquisition will be S$12.34 million in cash and 64 million new shares in USP Group.
The new shares are valued between S$2,496,000 to S$3,891,200 based on the last traded share price and the latest reported net asset value per USP Group share, respectively. The group's counter closed at 3.9 Singapore cents on Friday.
The cash component of the consideration will be funded by internal resources, bank financing and, depending on market sentiment, a private placement, according to USP Group.
Currently, USP Group's existing business comprises the blending and distribution of diesel and engine oil, as well as property development.
Its acquisition target, Supratechnic, will see USP Group diversifying into the trading of marine equipment as well as industrial machinery and equipment. Supratechnic has operations in Singapore, Malaysia and Indonesia.
Based on Supratechnic's audited consolidated accounts for the financial year ended Dec 31, 2014, its net tangible asset stands at about S$17,943,000 and its net profit after tax is about S$2,584,000.
USP Group's board will hold an extraordinary general meeting to seek shareholders' approval for both the acquisition and the diversification of the group's business scope that the deal entails.