SINGAPORE (Oct 6): Catalist-listed MeGroup has entered into a definitive sale and purchase agreement to acquire an additional 25% stake in subsidiary MJN Motors, which operates the group’s Honda dealerships in Malaysia.
The agreement, entered into with vendors Tan Kian Boon and Wong Sai Hou, will see MeGroup increase its stake in MJN Motors from 55% to 80%.
Wong is the son of MeGroup executive chairman and CEO Wong Cheong Chee, and also MeGroup’s head of Group Expansion & Strategy and Dealerships. He is also the brother of MeGroup executive director Wong Keat Yee.
Under the terms of the agreement, the aggregate consideration will be payable in two tranches.
The first tranche will see MeGroup pay Tan RM634,352.80 ($209,779.69) by way of an issue and allotment of over 1.02 million shares to Tan at an issue price of 20.5 cents.
The issue price represents a 13.9% premium to the weighted average price of 18 cents per MeGroup share transacted on Sept 24 – the latest available full market day prior to the date of the sale and purchase agreement.
In the first tranche, MeGroup will also pay Wong RM158,588.20 in cash.
In the second tranche, MeGroup will pay Tan and Wong up to RM3 million and RM750,000, respectively.
The purchase consideration in both tranches are based on their shares of MJN Motors’ net profit after tax for FY2019 and FY2020.
“Through this increase in our stake in MJN Motors, we can consolidate our interest in the Honda Dealership operations to tap on the strong demand for Honda cars,” says CEO Wong Cheong Chee.
“As Honda continues to be the top-selling foreign car brand in Malaysia, we are confident that this demand will persist, and we will increase our marketing efforts to continue generating returns for the business,” he adds.
Shares in MeGroup closed 1 cent higher, or up $5.6%, at 19 cents on Friday.
