Mercurius rises 7.7% on s$36m plan to buy Malaysia grocery businesses

Singapore

SHARES of Mercurius Capital Investment rose 7.7 per cent or 0.5 Singapore cent on Friday, to close at seven Singapore cents, after the Catalist-listed company proposed to acquire 10 grocery businesses in Malaysia for S$36 million.

Based on its Friday closing price, Mercurius now has a market capitalisation of S$84.3 million.

The grocery businesses it plans to acquire are Tan Lee Heng; Songmart Cash & Carry; Granville Grocery; and seven Pasaraya Songmart branches located in Kluang, Kulaijaya, Kota Tinggi, Pulai Perdana 2, Sri Stulang, Bandar Tenggara and Chellam.

Mercurius had made the announcement at 8am on Friday, before the market opened.

On Thursday night, the company had in fact released its independent auditor's report containing a disclaimer of opinion.

In the report, Mercurius' auditors highlighted losses and significant liabilities that "cast doubt" on the group's ability to continue as a going concern.

For FY2020, Mercurius reported a loss of S$2 million and had net current liabilities of S$4.2 million.

The auditors, of Nexia TS Public Accounting Corporation, also said they could not obtain "sufficient appropriate evidence" to determine that the accounts of a joint venture, which were incorporated in Mercurius' consolidated financial statements, are "true and fair".

In view of these issues, Nexia TS said it could not express an opinion on whether Mercurius' accounting records have been properly kept.

Investors, however, appeared quite willing to look past this statement of caution.

Shares of Mercurius reached an intraday high of 7.8 Singapore cents on Friday. It was the second most heavily traded stock on the Singapore Exchange, with 135.2 million shares worth S$9.9 million changing hands.

The company had requested a trading halt on Tuesday morning and lifted the halt on Friday before market open.

Mercurius expects to sign a definitive agreement for its purchase within 90 days.

It will pay the vendors by issuing 200 million new ordinary shares at an agreed price of S$0.18 per share.

A manufacturer and seller of bedding products and related household goods, Mercurius said the proposed acquisition is expected to result in the diversification of its business portfolio and revenue stream.