PETALING JAYA: Cape EMS Bhd
has entered into a conditional stock purchase agreement for the proposed acquisition of iConn Inc for RM76.6mil from Hidirlar Family Trust (TH Trust), Rabia Hidirlar Investment Trust (RH Trust) and Low Kim Teck.
It has also proposed a private placement of up to 92.3 million new ordinary shares to third party independent investors at a price to be determined.
In a filing with Bursa Malaysia, Cape EMS stated that the strategic acquisition would integrate iConn’s design and engineering capabilities into Cape EMS’s process, which would allow it to expand its electronics manufacturing services segment’s range of services.
This would help improve its appeal to existing and potential customers, it added.
“Given our strategy is to focus on our core competency within the EMS business segment and further grow our business offerings, we believe the acquisition will allow us to gain an operational foothold within the United States and to further explore new opportunities in Canada and Mexico where iConn currently has an active presence in,” Cape EMS managing director Christina Tee Kim Chin said.
“The geographical proximity and similar time zone differences will enable us to better serve existing and new customers in addition to reducing our risk concentration in a specific product or market.
“In addition to that, the access to iConn’s expertise in the design of manufacturing and engineering of electronic components can be further offered to our existing as well as new customers thereby improving our competitive advantage on a global scale,” Tee added.
The proposed acquisition will see Cape EMS acquire iConn in its entirety for a cash consideration of US$16.5mil.
The deal will be funded through the proceeds to be raised from the proposed private placement as well as internally generated funds and or bank borrowings, the company said.
Cape EMS said the seller has given a profit guarantee of US$8mil over an agreed period of 36 months from Jan 1, 2024 until Dec 31, 2026.
Some 81.5% of iCOnn will be acquired from TH Trust and RH Trust and the rest from Low.
iConn is headquartered in California with a wholly-owned subsidiary in Dongguan, China.
iConn is an existing customer and supplier of the Cape EMS group, whereby the Cape EMS group provides electronic manufacturing services to iConn for technology based access points and mechanical apparatus for life science and advanced medical equipment.
In addition, iConn is the Cape EMS Group’s supplier for electrical interconnect components that the Cape EMS group uses for its other customers.
