Nordic Group plans to make a 23.8 cents per share all-cash offer for Starburst Holdings, which values the target company at around $59.1 million.
The offer price is a premium of 5.78% over the latter’s last traded price of 22.5 cents.
Both companies are listed on the SGX. Nordic Group is a holding company with subsidiaries ranging from systems integration to maintenance, repair and other engineering services.
Starburst, on the other hand, specialises in the design, building and maintenance of shooting ranges.
As at June 30, Starburst’s net asset value was 14.94 cents per share.
Nordic has already received irrevocable undertakings from Edward Lim and Yap Tin Foo to sell their shares.
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Lim is Starburst’s chairman and Yap is the managing director. They hold 35.8% and 33.9% of the company, for a total 69.7%.
Nordic plans to fund the acquisition with internal resources and bank borrowings.
“The Nordic Group believes that the business and operations of the Starburst Group are a strategic fit and will provide synergistic benefits to the business and operations of the Nordic Group,” states the offer announcement by Phillip Securities, which is advising Nordic.
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The engineering competencies of both companies are complementary and “may be transferred and assimilated to build economies of scale and cost efficiencies and enhance overall productivity.”
Nordic can also tap on Starburst’s network of clients in southeast Asia and the Middle East.
“There is strong potential for cross-selling of the Nordic Group’s mechanical, electrical and instrumentation, insulation and scaffolding services to the clients of the Starburst Group,” adds Phillip Securities.
Depending on the level of acceptances, Starburst may be taken private.
Last August, Lim and Yap sold 3.2 million shares each at 39 cents to investors including ICH Capital and Eternal Glade Investments.
The share price subsequently hit as high as 42 cents in early November.
On Nov 15, the company disclosed that Lim, Yap and two other executives were interviewed by the CPIB on Nov 12.
As a result, the share price plunged by half and has largely maintained at that level since, even as it announced a slew of new contract wins in 2021.
Other than a Nov 23 announcement that Lim has surrendered his passport, no other updates on this matter have been provided by Starburst.