Ecomate acquires majority stake in IT firm for RM8.4mil as part of diversification strategy
KUALA LUMPUR: Home furniture specialist Ecomate Holdings Bhd is acquiring a 60 per cent equity stake in Progressive Computer Systems Sdn Bhd (PCS) for RM8.4 million.
This acquisition is part of its strategy to diversify into the information and communications technology (ICT) sector, Ecomate said in a Bursa Malaysia filing today.
"The stake will be acquired from Law Seng Peng, a 66-year-old Malaysian who is currently the sole director and shareholder of PCS, with the transaction to be settled fully in cash.
"Upon completion of the proposed acquisition, PCS will become a subsidiary company of Ecomate," said the furniture maker.
PCS, incorporated in 1990, is involved in the marketing and servicing of computers, peripherals, and software, as well as software development and training services.
Ecomate said the proposed acquisition represents an opportunity to venture into the ICT solutions business and diversify its earnings base.
The acquisition will be funded entirely through internally generated funds.
The group added that Law will remain as a director of PCS post-acquisition and continue to be involved in the company's operations.
Regarding the proposed diversification, Ecomate said it is currently involved in the design, production and sale of ready-to-assemble (RTA) furniture, including living room, bedroom and customised pieces.
It noted that financial contributions from PCS may account for 25 per cent or more of the group's net profit in the future, which triggered the need for shareholder approval under Bursa Malaysia's listing requirements.
An extraordinary general meeting will be convened to seek shareholder approval for both the acquisition and diversification proposals.
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