Dayang Enterprise Holdings Bhd plans to expand its marine transport business by acquiring a 40% stake in Syarikat Borcos Shipping Sdn Bhd.
Dayang Enterprise Holdings Bhd plans to expand its marine transport business by acquiring a 40% stake in Syarikat Borcos Shipping Sdn Bhd for RM132mil cash from AWH Equity Holdings Sdn Bhd. The oil and gas service provider"s managing director, Tengku Yusof Tengku Ahmad Shahruddin, said the deal would boost Dayang"s performance as the long-term outlook for the marine transportation industry was positive.
?Through this acquisition, Dayang can participate in the growth of a leading marine transportation and support service company which has substantial market share in the country with an operational presence in the Middle East,? he said yesterday after the signing ceremony of the strategic acquisition between the parties.
?Currently, we operate marine chartering operations and own five vessels while Borcos, Malaysia"s second largest provider of offshore support vessels, owns 33 marine vessels with the addition of six more by year-end.?
From left: Datuk Wan Ariff Wan Hamzah, Dayang executive chairman Datuk Hasmi Hasnan and Tengku Yusof Tengku Ahmad Shahruddin after the signing Tengku Yusof said Dayang, which has about RM100mil cash in hand, planned to pay 20% of the stake in cash and the rest from bank borrowings. It is currently bidding for about RM2bil worth of contracts locally and has an order book of RM700mil that should keep the company busy until 2012.
TA Securities head of research Kaladher Govindan said the acquisition was a good deal that would benefit both parties.
?It will help lower Borcos" gearing ratio from the current 2.1 times to 1.64 times as part of the money will be used to reduce its borrowing. For Dayang, the acquisition will give the company the opportunities to tap new markets apart from expanding its marine transportation business,? he told.
Meanwhile, when asked whether Borcos would go for listing, chairman Datuk Wan Ariff Wan Hamzah said that would depend on the market condition.
Apart from six new vessels coming in this year, Borcos has more two offshore support vessels to be delivered in 2011. The company currently has an order book of RM300mil.