Scientex Berhad is a flexible plastic packaging (FPP) manufacturer and an affordable home developer. It was incorporated in 1968 and listed on Bursa Malaysia in 1990. Its manufacturing facilities span across Malaysia, Vietnam, and the United States. In 2018, it celebrated its 50th anniversary and launched a new Vision 2028 which aims to increase its FPP production output to 1,000,00 metric tonnes as well as build 50,000 affordable homes by 2028.
In November 2018, Scientex announced a proposed acquisition to purchase a stake in Daibochi – a player in the FPP industry. Scientex is no stranger to acquisitions and fully acquired Klang Hock Plastic Industries in May 2018. The proposed acquisition sparked my interest in Scientex. I decided to attend its extraordinary general meeting to know more about the company.
Here are seven things I learned from the 2019 Scientex EGM:
1. Scientex intends to buy a 42.4% stake — equivalent to 139.1 million ordinary shares — in Daibochi at RM222.5 million via a share swap. After taking into consideration of the distribution of Daibochi’s interim dividend at RM0.01 per share in December 2018,one new Scientex ordinary share at RM8.80 will be issued in exchange for every 5.535 Daibochi shares purchased at RM1.59 each. The proposed acquisition was put forward and voted for by shareholders during the 2019 EGM.
2. Upon completion of the proposed acquisition, a mandatory takeover offer will be triggered to acquire the remaining shares and warrants in Daibochi. The shares can be settled either via cash or issuance of new Scientex shares at the exchange ratio of 5.535 mentioned above whereas each of the remaining warrants will be offered at RM0.01 via cash. Scientex will rely on internally generated cash and/or bank borrowings to fund the offer that is targeted to be completed by the
