AGROCHEMICAL company, Hextar Global Bhd, has entered into three separate agreements that will result in the acquisition of a chemical trading business and the divestment of its consumer products segment.
As part of the proposed acquisition, Hextar has secured a share sale agreement with Hextar Holdings Sdn Bhd (HHSB) to obtain full ownership of Hextar Industrial Chemicals Sdn Bhd (HICSB) for a cash consideration of RM10 million.
Since HHSB holds a substantial 62.49% shareholding in Hextar, this transaction qualifies as a related party transaction but does not necessitate shareholder approval under the Main Market Listing Requirements.
Established in 2009, HICSB specialises in trading industrial chemicals across various sectors, including food, pharmaceuticals, plastics, coatings, PVC, personal care, rubber, and adhesives.
Hextar said the strategic move aligns with it’s diversification strategy, which aims to expand its footprint in the specialty chemicals industry and foster sustainable growth through diversified revenue streams.
The acquisition will not disrupt the existing management team of HICSB, led by its MD Chiam Long Chai, who will continue overseeing the company’s day-to-day operations.
In addition to the proposed acquisition, Hextar will divest its consumer products segment, encompassing Halex Woolton (M) Sdn Bhd and Halex Marketing Sdn Bhd, to an unrelated third party for RM3.5 million.
The divestment is not expected to have a significant impact on the company’s financial performance, as the consumer products segment has been operating at a loss and is considered non-core to Hextar’s primary business activities.
The consumer products segment primarily engages in the manufacturing and distribution of disposable healthcare products such as wet wipes, tissues, and cotton-based items. Its manufacturing facility is located in Tampoi Industrial Estate, Johor Bharu. The segment has struggled due to stiff competition from foreign manufacturers and the escalating costs of raw materials.
Following these strategic moves, Hextar will shift its focus to its core business divisions, namely agrochemicals and specialty chemicals.
Hextar’s ED Lee Chooi Keng explained that the decision to exit the consumer products segment and redirect resources towards more profitable avenues was based on a comprehensive performance review.
Lee highlighted the growth potential of the specialty chemicals business, as evidenced by its recent financial results.
She emphasised that amid the current challenging business landscape, the proposed acquisition and divestment would enable Hextar to concentrate on expanding its core chemicals businesses, leveraging their combined expertise, knowledge, and strengths to capitalise on synergistic benefits and set themselves apart from competitors. – TMR