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Tai Sin Electric buys 40% stake in Indonesian firm

MAINBOARD-LISTED Tai Sin Electric has entered a subscription agreement for a 40 per cent stake in Indonesian firm PT Elmecon Multikencana for an aggregate consideration of S$500,000, it announced on Tuesday night.

The deal was made via Tai Sin unit Lim Kim Hai Electric Co (LKHE). The consideration was agreed upon on a willing buyer and willing seller basis, and is funded from LKHE's internal resources.

Elmecon's business is in the field of engineering, automation and wireless monitoring control, and it is an authorised distributor of Omron products. Its audited net tangible assets as at Dec 31, 2018 was 6,287 million rupiah (S$610,000) and its audited profit after tax was 1,595 million rupiah.

Noting that Elmecon is in the same line of business as LKHE, Tai Sin said: "The investment in Elmecon provides an excellent opportunity for the group to gain experience in doing business in Indonesia."

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Completion of the deal is conditional upon, among other things, Elmecon obtaining approvals from certain financial institutions and a principal supplier, and "the rectification of specified matters identified during the legal due diligence process", said Tai Sin, without elaborating.

The deal is not expected to have any material effect on the earnings per share and net tangible assets per share of the Tai Sin Group in the current financial year ending June 30, 2020.

LKHE has also signed a share-purchase agreement to acquire another 27 per cent stake from Elmecon's two other shareholders, in the event that the profit target in the agreement is met.

Tai Sin shares closed unchanged at S$0.34 on Tuesday before the news.