iWOW inks deal for potential S$18m acquisition of telco-solutions provider

TRACETOGETHER token maker iWOW Technology has signed a non-binding term sheet for its proposed acquisition of a private Singapore-based telecommunication solutions provider at a consideration capped at S$18 million.

Without naming the company, the Catalist-listed company said in a bourse filing on Thursday (Sep 22) that the target company is a regional value-added distributor with a proven track record of serving telcos and enterprise clients with mission-critical infrastructure.

The term sheet was entered into with the sole shareholder of the company and its controlling shareholders, it said, adding that the target company has a wholly-owned subsidiary incorporated in Malaysia.

iWOW said the proposed acquisition has the potential to enhance shareholders’ value in the company and contribute positively to the growth, financial position and long-term prospects of the group.

This comes as the move, if undertaken and completed, would “present a good opportunity” for the group to enhance its capabilities and credibility to pursue large-scale national information and communications technology infrastructure opportunities, iWOW said.

Other benefits include allowing the group to exploit the enlarged customer-base through cross-selling of the group’s enhanced suite of products and solutions, extend its regional presence, as well as inherit a proven service-operation team, it said.

The move will also enable the group to tap regional opportunities arising from the 5G roll-out, and better position itself to meet the exponential demand for smart city, Internet-of-Things solutions from both the public and private sectors, it added.

iWOW said the consideration, to be capped at S$18 million, was arrived at on a willing-buyer, willing-seller basis, following arm’s-length negotiations between the parties.

It took into account the target company’s average annual net profit after tax of about S$1.35 million in the last 3 financial years up till last Dec 31, profit guarantee, net loss after tax undertaking and net tangible asset undertaking.

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The eventual sum will be calculated based on 6 times multiple of the audited annual average net profit after tax of the target company, after deducting exceptional expenditure over a 3-year period starting Apr 1, 2023, it added.

Shares of iWOW closed down 6.3 per cent or S$0.015 at S$0.225 before the announcement on Thursday.