Advanced Holdings to pay S$15m for smaller stake in Agricore

Singapore

ADVANCED Holdings announced on Friday morning that it has downsized its acquisition of Agricore Global Pte Ltd from 100 per cent of its share capital to 12.25 per cent, and will pay S$15 million for the minority stake.

The company said it has decided not to conduct a full takeover of palm oil cultivator Agricore in view of commercial considerations, and will continue to focus on its existing core business of providing engineering services and equipment.

After negotiating with seller Vertex DG, Advanced entered into a conditional share purchase agreement for the revised acquisition amount on Oct 18, with a long stop date of Jan 18, 2019.

The first tranche of S$7.5 million will be paid at completion of the agreement, while the second tranche is to be paid within a period of four months from the completion date.

Advanced intends to fund the acquisition with a combination of bank borrowings and internal cash resources.

The previous sale and purchase agreement for Agricore's entire issued and paid-up share capital has been allowed to lapse on the long stop date of Oct 12.

"The board believes that the restructured acquisition will provide an opportunity for the company to venture into a new business area that has good potential for growth," Advanced said.

"Accordingly, the restructured acquisition would allow the company to diversify from the existing industries that it serves, and will therefore limit its exposure to risks relating to the prolonged uncertainty of external economic factors affecting its industry, and help to diversify its revenue streams."

It intends to explore other forms of long-term collaboration with Agricore and leverage potential commercial, operational and cost synergies between the two companies.