KUALA LUMPUR: Kencana Petroleum Group Bhd is buying Allied Marine & Equipment Sdn Bhd (AME) for RM400 million in its move to become a fully integrated offshore services player.
The company said on Friday, May 13 the purchase of AME would be a share swap, where it would issue 149.25 million new Kencana shares at RM2.68 a share. The vendors of AME are Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.
It said AME provides offshore diving and underwater related services for inspection, repair and maintenance of structures, pipelines and risers and for the CONSTRUCTION [] of underwater facilities for the oil and gas industry.
'The proposed acquisition will also enable Kencana to recognise in full the earnings stream and cash flows that is expected to be generated by AME. The proposed acquisition is expected to expand Kencana's recurring revenues with higher margins being earned.
'There are also potential cost synergies for Kencana with the possibility of AME group providing services to Kencana's in-house subsea services requirements apart from savings on general and administration overheads,' it said.
Kencana said AME has the capability to provide a wide range of sub-sea services for the oil and gas industry. For the past three years, apart from Malaysia, AME had also undertaken various projects for multinational oil and gas players in Indonesia, Vietnam, China and India.
The vendors guaranteed to Kencana Petroleum that AME's audited consolidated profit after tax'' for each of the financial years ending Sept 30, 2011 and Sept 30, 2012 shall not be less than RM40 million.
The company said on Friday, May 13 the purchase of AME would be a share swap, where it would issue 149.25 million new Kencana shares at RM2.68 a share. The vendors of AME are Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.
It said AME provides offshore diving and underwater related services for inspection, repair and maintenance of structures, pipelines and risers and for the CONSTRUCTION [] of underwater facilities for the oil and gas industry.
'The proposed acquisition will also enable Kencana to recognise in full the earnings stream and cash flows that is expected to be generated by AME. The proposed acquisition is expected to expand Kencana's recurring revenues with higher margins being earned.
'There are also potential cost synergies for Kencana with the possibility of AME group providing services to Kencana's in-house subsea services requirements apart from savings on general and administration overheads,' it said.
Kencana said AME has the capability to provide a wide range of sub-sea services for the oil and gas industry. For the past three years, apart from Malaysia, AME had also undertaken various projects for multinational oil and gas players in Indonesia, Vietnam, China and India.
The vendors guaranteed to Kencana Petroleum that AME's audited consolidated profit after tax'' for each of the financial years ending Sept 30, 2011 and Sept 30, 2012 shall not be less than RM40 million.
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