Why a US-listed video game firm is paying a premium to take Ban Leong private
[SINGAPORE] For over 30 years, one little-known wholesaler and distributor of technology products – including IT accessories, gaming components and smart technology – steadily built up its distribution network.
Even after Ban Leong Technologies listed on the mainboard of the Singapore Exchange in June 2005, it remained largely under the radar to both consumers and investors.
Now, it is making headlines as video game distributor Epicsoft Asia, an indirect wholly owned subsidiary of Nasdaq-listed GCL Global, is splashing out cash to take the company private.
Headquartered in Singapore with regional offices in Malaysia and Thailand, Ban Leong is an authorised distributor for over 50 well-known brands, including Razer, Nvidia, Samsung, Huawei, TP-Link and LG.
'This acquisition is not a short-term play on stock performance, it's a strategic move to integrate Ban Leong's strong distribution and vendor network with GCL Global's digital capabilities and software portfolio,' GCL Global's chief executive Sebastian Toke told The Business Times.
'We see this as a platform for accelerating physical reach and product innovation in Asia's fast-evolving consumer tech landscape,' he added.
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The acquisition could also signal a trend where global software companies want control over physical touchpoints, especially in Asia.
'Software companies are increasingly seeking ways to influence the entire customer experience from digital interaction to physical product deployment,' Toke said.
'This is particularly relevant in Asia, where rapid urbanisation, strong mobile adoption, and consumer demand for smart devices are reshaping how technology is distributed and consumed.'
Epicsoft Asia last week made a cash offer of S$0.6029 per share to Ban Leong's shareholders.
This represents a 60.8 per cent premium over Ban Leong's last transacted share price of S$0.375 on Apr 29, the day before the offer was announced. It is also at a premium of 75.5 per cent to Ban Leong's volume-weighted average price of S$0.3435 over the last 12 months.
The offer price also represents a premium of 42.4 per cent over the group's net asset value per share of S$0.4233 as at Sep 30, 2024.
Epicsoft Asia has received irrevocable undertakings from Ban Leong's managing director Ronald Teng and his wife Teo Su Ching to accept the offer. Together, the couple holds 28.13 per cent of the company.
If Epicsoft Asia scoops up at least 90 per cent of Ban Leong shares at the close of the offer, it said it will exercise its rights to compulsorily acquire the remaining shares from shareholders who have not accepted the offer.
Since the offer was made, shares of Ban Leong have jumped 57.3 per cent to close at S$0.59 on Monday (May 5).
Toke believes there is 'untapped value' in Ban Leong's brand partnerships, regional infrastructure and sales network that justifies the premium paid.
'Ban Leong's assets hold strong strategic value that we believe has yet to be fully realised by the broader market,' he said.
For the latest first half-year to September 2024, Ban Leong reported earnings of S$1.4 million, down 36.2 per cent from S$2.2 million the previous year.
H1 revenue fell 4.8 per cent to S$97.5 million, from S$102.4 million previously.
'Beyond the numbers, Ban Leong has demonstrated strong adaptability to market shifts. It successfully expanded into e-commerce during the pandemic, attracted new brand partnerships, and grew its commercial segment,' Toke said.
'These are not typically reflected in the share price but point to operational depth and untapped growth potential,' he added.
Since its listing 20 years ago in 2005, shares of Ban Leong have climbed just 70.5 per cent to S$0.375, before the offer was made.
Long-time shareholders, though, might still rue its delisting.
The counter has generated a total return – with dividends reinvested – of 478.8 per cent over the same period. This works out to an annualised total return of 9.2 per cent.
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