Hot stock: Global Invacom shares soar after Tactilis unit acquisition called off

SHARES in Global Invacom Group (GInva) surged in early trading on Monday after the satellite communications equipment provider and its vendor, Tactilis Pte Limited, mutually terminated a deal for the latter's Malaysian subsidiary.

As at 10.30am, GInva shares were trading at 7.5 Singapore cents, up 3.3 cents or 78.6 per cent. With 23.45 million shares traded, GInva shares were also among the most heavily traded on the Singapore bourse. Turnover on those shares amounted to S$1.61 million.

On Sunday, GInva said that the proposed acquisition of Tactilis Sdn Bhd was called off due to "difficulties in fulfilling all of the conditions precedent in the sales purchase agreement". GInva said that all fees, costs and expenses relating to the proposed acquisition would be borne equally by itself and Tactilis Pte Limited. The break fee of US$20 million under the agreement is also being waived.

In October 2018, GInva announced it had agreed to acquire Malaysia-based Tactilis in a deal that could result in a reverse takeover. Tactilis' flagship product is a biometric solution known as the Tactilis Touch, which is said to capture fingerprints at least four times more accurately than rivals, and can also carry out facial and iris recognition.

Under the agreement, GInva was to subscribe for convertible notes worth US$2 million for a 2 per cent stake in Tactilis, and later acquire the remaining 98 per cent stake by issuing 1.8 billion shares at 15 Singapore cents per share, for a total of US$196 million.

In November last year, it was reported that three members of GInva's seven-member board voted against the transaction, and that GInva planned to push ahead with the deal.

Despite being valued at US$200 million by Frost & Sullivan, Tactilis Sdn Bhd earned revenues of just US$31,925 in 2017 and US$3,600 in 2016. It also racked up losses of US$2.36 million and US$1.2 million in those years respectively.

On April 11, GInva was queried by the SGX which flagged unusual movements in its share price after the counter surged from around three Singapore cents to 5.2 cents. In response to the query, GInva said at the time that negotiations were still ongoing between itself and the vendor. It added that it was unaware of any other possible explanation for the unusual price movements.

GInva was placed on the SGX watch list in June last year after recording a volume-weighted average price of less than S$0.20 and an average daily market capitalisation of less than S$40 million over the then last six months.