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PEC to buy remaining 40% stake in Chinese subsidiary for 37.5 million yuan
MAINBOARD-LISTED plant and terminal engineering specialist PEC Ltd will consolidate its stake in a Chinese subsidiary for close to 37.5 million yuan (S$7.4 million), the board said on Tuesday, a day after the sale-and-purchase agreement was made.
PEC held a 60 per cent stake in Huizhou Tianxin Petrochemical Engineering, a service provider for the chemicals industry, which was set up as a joint venture in 2005.
But it is now buying out partners Sinopec Nanjing and Sinopec Luoyang, through which acquisition PEC will acquire the remaining 40 per cent of Tianxin. The duration of the joint venture, which the parties had agreed upon, has expired, the board added, in stating its reasons for the deal.
PEC, which aims to complete the purchase within 60 business days, added that it plans to continue Tianxin's business in the long run and does not intend to introduce any major changes.
The price tag was reached on a willing buyer/willing seller basis, and the purchase will be funded by internal resources, the board added.
The value of the deal represents 6.33 per cent of PEC’s market value as at June 12. The net profit attributable to the assets was 7.72 per cent based on half-year results ended Feb 13.
Based on unaudited financial statements for the six months to Dec 31, 2019, Tianxin’s net asset value was nearly 73.2 million yuan, and its pre-tax profit for the period, 9.1 million yuan.
Had the acquisition been done on July 1, 2018, PEC’s pro forma earnings per share would have risen from 3.2 Singapore cents to 3.6 Singapore cents, the board also noted.
PEC shares closed flat at S$0.46 on Tuesday, before the announcement.