SINGAPORE (Oct 9): Hi-P International’s subsidiary, Hi-P Holdings, has signed a conditional agreement to acquire 100% of the issued shares in the capital of South East Asia Moulding Company (SEAMCO) for up to US$31 million ($42.5 million).

The consideration for the acquisition is US$31 million minus any amount by which the net assets value of SEAMCO falls short of US$7.47 million as at the completion date of the acquisition.

SEAMCO, which manufactures high volume and high precision engineering plastic components at its production facility in Singapore, had a net tangible asset value of US$2.5 million as at end-November 2018.

Upon the completion of the proposed acquisition, SEAMCO will become a wholly-owned subsidiary of Hi-P.

In a bourse filing on Tuesday, the Mainboard-listed contract manufacturer of smart phones, tablet computers and other consumer electronics says the proposed acquisition is strategic to the group as it enables the group to tap on the strength, resources and business network of SEAMCO.

Hi-P adds that it will also enable the group to offer a more comprehensive value proposition to a broader customer base across a wide region.

The proposed acquisition is also expected to provide the group with new revenue streams to strengthen its financial performance.

“SEAMCO’s strong capabilities in processing ultra-precision thermoplastic and thermoset components for a specific product category are unmatched in the industry. The proposed acquisition will certainly strengthen our core competency in precision plastic engineering,” says Yao Hsiao Tung, executive chairman and CEO of Hi-P International.

“In addition, the proposed acquisition provides an immediate access to a blue chip customer that present us with enormous growth prospects in consumer electronics and automotive market segments,” he adds.

Hi-P intends to finance the consideration through its internal resources.

Shares in Hi-P closed 3 cents higher, or up 2.7%, at $1.16 on Tuesday, before the announcement of the proposed acquisition.