CSE Global to acquire radio-communications business for S$20.4m

MAINBOARD-LISTED CSE Global said on Tuesday (Nov 8) that it will acquire a radio-communications business, Logic Wireless, from Logic Technologies for a consideration of NZ$25 million (S$20.8 million).

CSE Global said in a bourse filing that the proposed acquisition provides an opportunity for the company to "expand and extend its existing radio-communication business and solutions to its customers in New Zealand, Australia and the UK".

Under the sale and purchase agreement, CSE Global will acquire the entire share capital of Logic Wireless Limited, Logic Wireless Pty Ltd and Logic Wireless Europe Ltd from the sellers. 

The Logic Wireless entities being acquired are "a leading provider of critical communications such as two-way radio and cellular communication solutions through New Zealand (plus the Pacific Islands), Australia and the United Kingdom", CSE Global said.

The company noted it has been engaged in radio and critical communications business in similar markets and "views the proposed acquisition as a strategic fit to complement its current business".

The target group recorded net profit before tax of around NZ$4 million, said its unaudited consolidated statements for the financial year ended Jun 2022.  As at Jun 30, the net book value and net tangible assets of the target group was around NZ$7.2 million. 

The consideration of NZ$25 million is subject to completion adjustments to the net asset value of the target group, up to the day immediately preceding the completion date, CSE Global said.

It intends to fund the consideration using proceeds from the company's rights issue and banking facilities. CSE Global announced a renounceable non-underwritten rights issue last month to raise gross proceeds of up to around S$33.8 million.

On a pro forma basis, CSE Global's net tangible assets per ordinary share would fall from S$0.2606 before the proposed transaction to S$0.2072 after it, assuming that the transaction had been effected on Dec 31, 2021. 

Assuming the proposed acquisition had been effected on Jan 1, 2021, pro forma earnings per share would have risen to S$0.0302 after the proposed transaction, from S$0.0293 before it.

The completion of the proposed acquisition is subject to several conditions, including regulatory approvals being obtained. 

CSE Global shares fell 1.4 per cent on Tuesday to close at S$0.345, before the announcement.

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