Swee Hong's plan to buy Chinese inspection firm fails

MAINBOARD-LISTED construction engineering firm Swee Hong will not buy a Chinese testing and inspection service provider, after it could not agree with vendors on the terms of the planned deal.

A non-binding memorandum of understanding (MOU) inked in August has lapsed, the board said on Monday, with no formal agreements reached in the bid for holding company Asiafame Group and its wholly-owned Hunan Chudi Hengda Inspection subsidiary.

British Virgin Islands-incorporated Asiafame and its indirect Hunan Chudi unit - which carries out services such as construction material inspection and structural inspection - were to have been sold by their shareholders: Lu Wenge, Ellen Luk Yee Lin, Ai Mizoguchi, Cheng Wang, Kenji Takashi and Andrew Bek.

Swee Hong's board had previously said that the deal would enhance the company's asset base and increase shareholder value, as well as help it to enter the Chinese market. The target companies would have become subsidiaries of Swee Hong, had the planned acquisition gone through.

But, "as parties are unable to agree on the terms of the proposed acquisition, the parties have not entered into any formalised agreements", the board has now said.

It added that the termination of the MOU will not have any material impact on the net tangible assets or earnings per share for the year to June 30, 2019.

Swee Hong most recently announced a first-quarter net profit of S$28,000 for the three months to Sept 30, plunging by 92.7 per cent on the year before, as revenue tumbled by 45.1 per cent to S$7.9 million.

The counter closed up by 0.1 Singapore cent or 16.67 per cent to 0.7 cent, on a volume of 20.8 million shares, before the announcement.