SINGAPORE (Nov 16): Less than a year after its controversial purchase of haircare company Wayco, Datapulse Technology is looking to reverse the deal.
In that time, two entire boards have been changed, and three CEOs have come and gone, opening up debate on corporate governance standards in Singapore.
On Thursday night, Datapulse, which was in CD manufacturing, announced plans to sell back Malaysia-based haircare products manufacturer, Wayco Manufacturing, to its original owner, Way Company.
“The board is of the view that effecting a disposal of its entire interest in Wayco will be in the interests of the company and shareholders as it will enable the company to concentrate its focus and resources on developing and growing its other core businesses,” says Datapulse.
Datapulse is selling the company for $3.2 million, some 7.5% lower than the $3.4 million it had paid a year ago.
The company hopes that the discount will push the sale through more quickly – and avoid protracted legal proceedings if Way Company were to raise a dispute.
Datapulse’s involvement with Wayco can be traced back to Nov 11, 2017, after a new controlling shareholder came on board.
A former founder and CEO, Ng Cheow Chye, sold his entire 29% stake to Ng Siew Hong. At 55 cents a share, the sale was at a premium of 57% over the stock’s last transacted price of 35 cents.
The deal was pitched as an attempt to build a new business to escape the rut of the dying CD making business.
But some shareholders questioned at the speed the deal was closed. The new board was announced on Dec 11, 2017, announced the following day and completed on Dec 15.
Other shareholders were not happy that the price of 55 cents wasn’t made available to the rest. By keeping the stake below 29%, Ng Siew Hong did not need make a general offer.
In the wake of outcry, Datapulse then revised the acquisition terms, including a buyback undertaking within one year if the Wayco acquisition did not turn out right.
“This announcement is also made in response to a request from Singapore Exchange Regulation for an update on the company’s deliberation in respect of the buyback undertaking,” Datapulse adds.
On July 17, Ng Siew Hong cut her stake to 19% by selling a 10% stake to one Aw Cheok Huat for the same price of 55 cents.
Aw, who has taken on the role of Datapulse’s chairman, planned to re-angle the company into the hotels and property business.
Kee Swee Ann, who was appointed back in Dec 11, resigned less than three months later on Feb 2, citing stress from dealing with the questions surrounding the acquisition.
Wilson Teng, who was based in Hong Kong and had experience in IT companies, was appointed Datapulse’s CEO in March this year, to execute the diversification into haircare. He resigned half a year later.
Lee Kam Seng, the company’s chief financial officer, has been made the interim CEO for the second time. His first stint as interim CEO was during February to March 2018.
In a separate announcement filed at 12.21am on Friday, Datapulse said that Ng Cheow Chye and two other former directors, Ng Cheow Leng and Si Yok Fong, have sent a letter of demand dated Nov 14 to the company, asking for a total of $751,118 due under a profit-sharing arrangement under their service agreements with Datapulse.