The acquisition was seen as an “attractive investment opportunity” for the company to diversify its revenue streams.
Union Steel Holdings, on Nov 26, announced that it will be acquiring the entire issued and paid-up share capital of Fastweld Engineering Construction for a total consideration of $2.5 million.
The news comes after Union Steel entered into a non-binding term sheet with Fastweld on Aug 5.
The sale and purchase agreement (SPA) was entered into by Union Steel’s wholly-owned subsidiary, Union Engineering and Fastweld on Nov 25.
Fastweld Engineering Construction is a Singapore-incorporated company that is in the business of installing industrial machinery and equipment, as well as mechanical engineering works. It also does process and industrial plant engineering design and consultancy services.
According to Union Steel, Fastweld’s book value and net tangible asset (NTA) value of its shares are approximately $6.002 million each for the FY2021 ended Dec 31, 2021.
Based on Fastweld’s latest financial statements for the period ended Oct 31, the company’s book value and NTA of its shares are approximately $1.55 million each.
According to Union Steel, the acquisition is an “attractive investment opportunity” for the company to diversify its revenue streams. It is also in line with its plans to expand into complementary businesses within the marine, offshore and oil & gas industries.
In addition, the acquisition will enable the company to “further strengthen its competitive advantage, value proposition and provide more holistic engineering solutions to its customers”.
Of the total consideration, 50% was paid on the date of the completion, whereas the remaining 50% will be payable within 12 months of the completion of the acquisition.
The sum will be funded by internal resources.
The acquisition was completed on Nov 25, on the same day the SPA was signed.
Shares in Union Steel closed flat at 54.5 cents on Nov 25.