Hextar Global Bhd has announced its acquisition of the entire equity interest in Propel Chemicals Sdn Bhd (PCSB) for a cash sum of RM16.5 million, marking a strategic move to further enhance its presence in the oil and gas (O&G) specialty chemicals sector.
In a filing with Bursa Malaysia, the agrochemical company revealed that its subsidiary, Hextar Kimia Sdn Bhd, will be the acquiring entity, taking over PCSB from Propel Global Bhd (with a 55% stake), Rancak Nikmat Sdn Bhd (36.9%), and Wiramas Baiduri Sdn Bhd (8.1%). The anticipated completion of this acquisition is set for the fourth quarter of 2023 and will be financed through internally generated funds.
PCSB primarily operates in the manufacturing, trading, and distribution of specialty chemicals, while also providing environmental chemical services to the O&G industry. This acquisition is seen as an opportunity for Hextar Global to position itself favorably for substantial O&G chemical tenders, thanks to PCSB’s extensive track record of over 30 years in supplying specialty chemicals and over a decade of experience in oilfield chemicals. Furthermore, PCSB’s licensed chemical storage and refilling facility in Kemaman will substantially increase Hextar Global’s current capacity, enabling the group to expand its specialty chemical repacking business.
Rayburn Azhar Ali, Executive Director of Hextar Global, highlighted the company’s active involvement in merger and acquisitions as a means to complement their existing operations. He expressed optimism about the impact of these acquisitions on the group’s position in the O&G specialty chemicals industry, stating that they expect the consolidation of PCSB to positively contribute to Hextar’s revenue and earnings upon the completion of the acquisition.
In a separate statement, Angeline Lee, Executive Director and Group Chief Executive Officer of Propel Global, explained that the decision to divest PCSB was motivated by the company’s three-year financial losses and its challenges as a smaller player in the specialty chemicals market, competing against larger, more dominant rivals with scale advantages. Following this divestment, Propel Global plans to utilize the proceeds to support its working capital and to settle the outstanding revolving credit of PCSB.
In the financial markets, Hextar Global shares closed unchanged at 75 sen on Friday, with the group holding a market capitalization of RM2.93 billion. Meanwhile, Propel Global’s shares finished half a sen or 3.03% lower at 16 sen, valuing the company at RM105.73 million.