OKH Global has entered into a sale and purchase agreement to acquire the entire issued and paid-up share capital of Chip Eng Seng Construction, the construction business of Acrophyte.
Chip Eng Seng Construction is part of Chip Eng Seng Corp, which has been renamed Acrophyte after it was privatised.
Gordon and Celine Tang are controlling shareholders of both OKH and Acrophyte.
OKH Global plans to pay for the acquisition of Chip Eng Seng Construction by issuing new shares at 5.252 cents each, which is a 212.43% premium over its volume weighted average price of 1.681 cents per share for the preceding day.
Upon completion, Acrophyte will hold a more than 50% stake of OKH Global.
As Chip Eng Seng Corp, construction was its core business, before it diversified into other businesses ranging from development to hospitality and even education.
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OKH CEO Lock Wai Han says the acquisition of Chip Eng Seng Construction will revitalise the company's business and provide it with a strong financial footing to pursue future growth opportunities.
OKH says its remaining investment properties have lease terms of under 20 years and are expected to continue to depreciate and decline in valuation in the medium to long term.
It sees a "challenging" outlook due to a tough macro environment with a large supply of multiple-user factory spaces, which are expected to have an impact on rentals in the medium term.
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"We see robust demand in the building and construction sector and the acquisition will allow OKH to gain access to (Chip Eng Seng Construction's) suite of credentials and certifications, participate in a wider range of tenders, and be well-positioned to capitalise in the strong momentum of the sector,” he adds.
As at June 30, Chip Eng Seng Construction has an outstanding order book of more than $2 billion.
OKH will seek shareholders' go-ahead for this deal at an EGM to be held.
OKH Global shares closed at 1.8 cents on Dec 4, up 12.5% for the day but down 10% year to date.
