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DeClout consolidates stakes in Beaqon, TJ Systems units, paying S$5 million in cash upfront
CATALIST-LISTED technology company DeClout now owns all the shares in a telecommunications subsidiary and an electrical parts unit, under a sale and purchase agreement inked on Aug 24.
The deal, to be funded using the group's internal resources, was described as being in line with a strategy of incubating and "harvesting" high-growth technology companies.
It is expected to give DeClout "greater flexibility to explore other capital market opportunities to strengthen the group's growth", according to the board's announcement on Saturday.
DeClout paid S$5 million in cash for the remaining 25 per cent interest in telecommunications company Beaqon Pte Ltd, after Beaqon consolidated its stake in TJ Systems, which designs, makes and trades in electrical products.
Another S$4.4 million, comprising cash and possibly shares, will be paid within a year to the two sellers - Beaqon and TJ Systems director Chua Chye Lee, and TJ Systems managing director Leow Chin Bee.
The board added that Mr Chua and Mr Leow could be paid more if they, as well as Beaqon acting CEO Chua Hock Choon, stay with the company. Beaqon's net tangible assets also have to increase by a certain amount between end-2017 and end-2019 for the men to get their extra earn-out.
And, if Beaqon were to be sold within a year for more than S$42.8 million, then Mr Chua and Mr Leow will each get a share of the difference, subject to certain conditions, DeClout said.
The company disclosed that the purchase price was reached after taking into account the finances and prospects of Beaqon and TJ Systems, and was negotiated at arm’s length on a willing buyer, willing seller basis. No independent valuation of Beaqon Group or TJ Systems was done for the acquisition.
DeClout ended flat last Friday at 7.8 Singapore cents.