Business

Tuesday October 13, 2009

Formis in reverse takeover of ISS

By DANNY YAP


The deal will make Formis Resources a dominant SAP player

KUALA LUMPUR: Formis Resources Bhd (FRB) has forged a partnership with leading SAP solutions provider ISS Consulting Solutions Bhd via a reverse takeover (RTO) of the latter, which would see FRB becoming a dominant player in the SAP market locally and regionally in time.

FRB executive vice-chairman and chief executive officer Datuk Mah Siew Kwok said the company would divest its 90% stake in subsidiary Diversified Gateway Bhd (DGB) to ISS for RM99mil, an exercise that would give FRB control of Ace Market-listed ISS.

ISS would buy a further 10% from the management of DGB for RM11mil under the RTO exercise.

The proposed sale of DGB would be satisfied via an issuance of 1.1 billion new ISS shares of 10 sen each to Formis Holdings Bhd or its nominees, resulting in a reverse takeover of ISS by FRB, whereby FRB would hold a 73.02% stake in the enlarged ISS.

From left: Harald Weinbrecht, Datuk Mah Siew Kwok and Formis Resources chairman Tan Sri Megat Najmuddin Megat Khas.

“FRB has proposed to distribute 185.9 million or 13.7% of the new shares to its shareholders on the basis of one ISS shares for every one FRB share held, which ultimately reduces FRB’s stake in ISS to 59.3%,” Mah told reporters at the share sale agreement signing yesterday.

He said FRB expected to realise a gain on disposal of about RM58.19mil (before consolidating the ISS group with DGB) upon completion of the disposal exercise.

Calling the acquisition the “missing link”, Mah said the deal would give FRB a meaningful presence in the SAP solutions segment.

“The enlarged ship with SAP experts on deck w ill provide FRB with the SAP expertise to seize SAP business opportunities that we previously had to turn down.

“Once our operations are fully merged, we will be able to provide the full array of IT services, including SAP solutions to our clients locally and regionally,” he said.

DGB, which began operations in 1995, provides computer networking solutions and systems integration services, offering a comprehensive range of telecommunications and data communications solutions in local and wide area network.

ISS is an SAP consultancy with 17 years’ experience and provides customised solutions to the chemical, automotive and manufacturing sectors.

On the sale of DGB and takeover of ISS, Mah said FRB’s strategic move to acquire a majority stake in ISS (59.3%) would help integrate, complement and value-add the company’s existing operations and enhance its value to stakeholders.

ISS chief executive officer Harald Weinbrecht said the company would initially focus on providing more SAP solutions domestically, especially to larger organisations, despite having operations abroad currently.

He said the ISS-FRB partnership was ideal as both could leverage on each other’s strengths.

“FRB has the financial capability and network, while ISS has the SAP expertise; combined together, we become a formidable SAP solutions provider,” he said.

Mah said FRB wanted to remain focused on its core competency in the provision of specialised IT services to the oil and gas industry, while not losing out on the business opportunities that came its way in the provision of SAP solutions.

“ISS is the right partner to build the SAP business in the fastest way at the lowest cost and risk,” he said.

Mah also said FRB would seek an exemption from the Securities Commission from having to make a mandatory offer for the remaining ISS shares.

 
FRB :  [Stock Watch]  [News]
ISS : [Stock Watch] [News]


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