Ever Glory to acquire fire protection services firm for up to S$5.6 million
Michelle Zhu
EVER Glory United Holdings is proposing to acquire Fire-Guard Engineering, a specialist subcontractor for fire protection services, for a maximum aggregate consideration of about S$5.6 million.
This would represent the group’s first acquisition since its listing in May 2023.
The deal will be funded through a combination of the company’s internal resources as well as net proceeds from its initial public offering, announced the engineering service provider on Thursday (Jan 18).
The maximum aggregate consideration comprises a base consideration of up to S$4.2 million, which will be payable in three tranches.
In the second tranche, Ever Glory will issue 4.1 million shares at S$0.40 apiece, or S$1.7 million worth of shares in the company to Fire-Guard Engineering’s vendors.
This issue price is subject to adjustment on May 3, 2024, in the event that S$0.40 should represent more than a 10 per cent discount to the counter’s volume weighted average price per share for the full market day before this date.
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Ever Glory said that if its share price falls below the issue price as at Jan 2, 2025, the company will issue additional consideration shares to Fire-Guard Engineering’s vendors, to address a shortfall in value of the second tranche’s consideration shares.
Assuming that the maximum number of additional consideration shares are allotted and issued, this would result in a maximum aggregate consideration of about S$5.6 million for the deal.
Fire-Guard Engineering provides services including installation, testing and maintenance of fire protection systems with a Building and Construction Authority grading of L5, which has a tendering limit of S$16 million.
Based on the company’s unaudited management accounts from Jan 1, 2023, to Oct 31, 2023, its net profit after tax was S$1.6 million, with a net tangible asset value of S$2.9 million as at Oct 31, 2023.
Ever Glory said its proposed acquisition is in line with the group’s strategy to expand its existing fire protection systems engineering services. This is because Fire-Guard Engineering’s services complement the group’s existing offerings of mechanical and electrical engineering services.
The company added that its proposed acquisition may potentially improve Ever Glory’s cost efficiencies, expand its network and client base as well as allow for more resources to pitch for projects.
Had the acquisition been completed on Dec 31, 2022, Ever Glory’s net tangible assets per share as at end-2022 would have been S$0.0473 instead of S$0.035.
Its earnings per share for FY2022 would have been reduced to S$0.0077 instead of S$0.0269, assuming that the acquisition was completed on Jan 1, 2022.
Shares of Ever Glory ended flat at S$0.37 on Thursday.
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