FM Global Logistics buys Singapore-based warehouse operator for RM18.9 mil to expand regionally
25 Sep 2023
FM Global Logistics Holdings Bhd, a logistics solutions provider, has acquired Singapore-based CAC Logistics Services Pte Ltd for RM18.86 million (S$5.5 million) cash, as it looks to expand its footing regionally.
CAC is principally engaged in general warehousing, road transportation and other related services. It currently operates 236,496 sq ft of warehousing space in Singapore, FM Global’s bourse filing showed.
FM Global’s indirect wholly owned subsidiary, FM Global Logistics Ventures Sdn Bhd, inked a sale and purchase agreement with the vendors Anthony Ng Koon Leng and Randy Cheong Yew Fei on Monday for the acquisition.
The purchase consideration is based on the vendors’ undertaking that CAC would produce an audited annual net profit after tax of no less than S$750,000 for the next two years. If the profit guarantee is not met, the vendors shall have to compensate FM Global for the difference between the promised and the actual earnings. As security for the profit guarantee, part of the purchase consideration — S$1.5 million — will be deposited into the escrow account of a legal counsel appointed by FM Global in Singapore, to be released only upon the due observance and performance of the vendors’ undertakings.
FM Global said its board believes that the profit guarantee is reasonable, after taking into account historical aggregate net profit after tax of CAC for FYE 2021, FYE 2022, and the seven-month financial period ended July 31, 2023 of about S$1.55 million, as well as the earnings potential of CAC based on its historical financial track record.
“The Singapore market fits into the group’s strategies as Singapore is a major regional business and shipping hub. Currently, the group has its presence in Malaysia, Indonesia, Thailand, Vietnam, India, the Philippines, Australia, the United Arab Emirates and the US. With the acquisition, the group would be able to immediately leverage the existing customer base, market and resources of CAC, which has an established warehousing business and valid business licence in Singapore. CAC will also serve as a gateway to the vast Singapore market via its base in Singapore, as Singapore has many multinational regional offices that will allow the group to increase its customer base,” said FM Global.
With CAC’s warehousing space in Singapore, FM Global’s total warehousing space would increase to about 1.32 million sq ft across multiple countries.
FM Global shares closed unchanged at 62 sen on Monday, giving the company a market capitalisation of RM346.2 million.
Source: The Edge Malaysia
