Frencken Group acquires Joe Lau's Avimac for S$14m

INTEGRATED technology solutions company Frencken Group announced on Tuesday that it is acquiring Singapore-incorporated Avimac for a cash consideration of S$14 million.

This is aimed at expanding the business and will be carried out via Frencken's wholly-owned subsidiary ETLA Limited.

Avimac supplies high precision machining parts to a variety of industries with a specialisation in the aerospace and semiconductor sectors. It was started in 2018 by Joe Lau, a veteran in the precision engineering industry and the founder of JEP Precision Engineering.

Avimac was a supplier to ETLA prior to the acquisition, supporting the group's needs in various manufacturing programmes.

In a statement, the group said that this move will enable it to accelerate the expansion of its capacity to support customers' new programmes, particularly from customers in the semiconductor industry, as well as gain access to new technologies and competencies, potentially building a new business pillar in the aerospace industry.

The net book value of Avimac was S$4.4 million as at July 31, 2021. No independent valuation was conducted on Avimac.

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Dennis Au, group president of Frencken, said: "Avimac has advanced technologies and capabilities in high precision machining, especially for stainless steel parts given its significant exposure to the aerospace industry."

He said that it is a "good fit" to its mechatronics division's integrated capabilities from design and development to manufacturing solutions.

"While the group already has experience serving the aerospace industry through our cooperation with NASA Jet Propulsion Laboratory, Avimac will act as a springboard for us to penetrate the commercial aerospace engineering industry given its established customer base, certified manufacturing facilities and forthcoming programmes," he added.

The acquisition will be financed using the group's internal resources and is not expected to have a material impact on the net tangible assets per share or earnings per share of the group for the financial year ending Dec 31, 2021.