Southeast Asia's leading integrated chemical group, Ancom Nylex Berhad (formerly Ancom Berhad), has announced the acquisition of a 70% equity interest in Colorex Sdn. Bhd. through a Share Sale Agreement (SSA) with vendors Loke Yeak Thong and Lim Tiak Cheong. The deal, valued at RM14 million, involves the purchase of 1,400,000 ordinary shares in Colorex.
Colorex, established in 1996, specialises in the blending and trading of chemicals, colours, and related products. The company is a major player in the local automotive sector and serves other industries such as furniture, appliances, and construction. For the financial year ending 31 December 2023, Colorex reported a revenue of RM43 million and a profit after tax (PAT) of RM1.8 million.
The acquisition is supported by a profit guarantee, ensuring Colorex will achieve a PAT of no less than RM2.5 million for two consecutive years. This translates to an implied price-to-earnings multiple of 8.0 times based on Colorex's annual profit guarantee and a valuation of RM20 million.
Datuk Lee Cheun Wei, Managing Director and Group CEO of Ancom Nylex, commented, "The Proposed Acquisition is both synergistic and earnings-accretive for the Group. Colorex's product range will enhance our existing portfolio, particularly in the automotive sector where our adhesives division is already active. This will further expand our specialty chemical offerings. We believe this acquisition will leverage our strengths and expertise to broaden our market reach and geographical presence."
He added, "This acquisition will also diversify our earnings within the chemicals segment and solidify our position as a fully integrated chemical group in Southeast Asia. We are optimistic about the prospects and growth opportunities, even as we navigate global challenges such as elevated shipping costs and forex volatility."
The acquisition will be funded through a combination of bank borrowing and internally generated funds. It is anticipated to be completed within six months of signing the SSA, subject to obtaining the necessary approvals and unforeseen circumstances.
