Grand Venture Technology to acquire J-Dragon and Formach for S$20M

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Grand Venture Technology has entered separate deals to acquire precision-engineering company J-Dragon Tech (Suzhou) and precision sheet-metal maker Formach Asia for a total of S$20 million, the precision manufacturing services provider said in a filing to SGX Friday.

The acquisitions are expected to enhance the company’s capabilities and capacity in China and Malaysia, Grand Venture Technology (GVT) said.

J-Dragon

J-Dragon will be acquired from Lee Boon Kwong, Lee Boon Leng and Eng Pau Yuen for a total of S$12.20 million, with around S$4.2 million in cash and S$8.0 million will be paid as 6.89 million new GVT shares issued at S$1.1619 each, the filing said.

Around S$2.98 million of the deal’s cash component will be paid on the deal’s completion, while the remainder will be paid 12 months after the issuance of J-Dragon’s audited financial statements for2021, the filing said.

The cash consideration will be funded via internal resources, including proceeds from the initial public offering (IPO) and the remainder from the proceeds of a placement announced in February, GVT said.

The new shares, which will represent 2.04 percent of GVT’s enlarged share capital, will have a six to 12 month lockup period, the filing said.

The Suzhou, China-based company makes parts, modules and tooling for aerospace, medical and semiconductor industries, the filing said.

“The acquisition of J-Dragon will enable GVT to gain immediate access to the former’s patents, know-how, and R&D capabilities, and facilitate the company’s strategic expansion into the aerospace and medical business segments,” GVT said in the statement.

“With the addition of J-Dragon’s capabilities and partner network in China, GVT will be in a good position to tap the huge market potential and positive trends in the aerospace and medical industries, initially in China, and then internationally,” it added.

Formach

Formach will be acquired from Leong Yoke Choy and Gan Lee Kim for around S$7.8 million, comprising S$6.8 million in cash and S$1.0 million in the form of 860,658 new shares issued at S$1.1619 each, the filing said. The 50 percent of the shares will have a six-month lockup period, while the remainder will have a 12-month lockup, the filing said.

The cash will be funded via internal resources from the net proceeds of S$23.5 million from the placement exercise announced in February, GVT said.

Johor, Malaysia-based Formach makes sheet metal, machine structure weldment, and provides electro-mechanical machine assembly services, GVT said.

“Formach’s capabilities in precision sheet metal fabrication, along with the resulting increase in production capacity post-acquisition, will enable us to accelerate our time to market, and facilitate faster onboarding of new customers,” Julian Ng, CEO of GVT, said in the statement.

“On the back of the improved efficiency, we are looking forward to accelerating the growth of our front-end semiconductor and life sciences business,” Ng added.

The deals are expected to be completed by the first quarter of 2022, the filing said.