MeGroup has entered a deal to acquire an additional 25 percent of its subsidiary and Honda dealership operator MJN Motors for up to 3.75 million ringgit (S$1.24 million), the Malaysian car dealership operator said in a filing to SGX Friday.
The stake, which will be acquired from Tan Kian Boon and Wong Sai Hou, will boost MeGroup’s holding in the operator of its Malaysia Honda dealerships to 80 percent from 55 percent previously, the filing said.
Wong is MeGroup’s head of group expansion and strategy and dealerships, and is the son of the executive chairman and CEO, Wong Cheong Chee, and the brother of executive director, Wong Keat Yee, MeGroup said. Wong currently has a 2.9 percent holding in MeGroup, the filing said.
MeGroup said the payment will be in two tranches, with Tan set to receive 634,353 ringgit via the issue of 1.02 million shares at S$0.205 each, marking a 13.9 percent premium to MeGroup’s weighted average share price of S$0.18 on 24 September, the last full market day before the deal was agreed.
Wong will receive a first tranche payment of 158,588 ringgit in cash, the filing said. The second tranche will be paid in cash within 30 days after the auditor’s report for financial statements for the year ending 31 March 2020, the filing said.
Tan and Wong will then receive the equivalent of 20 percent and 5 percent, respectively, of twice the amount of the full year net profit, MeGroup said.
On a pro forma basis, the acquisition is expected to be accretive to earnings per share (EPS), MeGroup said. It estimated that if the acquisition had been completed on 1 April 2018, EPS would have been 1.78 sen, compared with 1.18 sen reported for the period.
The deal is expected to be completed by end-2019, the filing said.