SOILBUILD Construction Group on Wednesday said it is buying Sembcorp EOSM - an associated firm of Sembcorp Industries that designs and makes building materials in Singapore, Malaysia and India - for some S$12.3 million.
The purchase involved buying the 60 per cent stake held by Sembcorp Industries' unit, and the remainder from a collection of sellers including Thye Chuan Engineering Construction and several individuals.
The sale price was determined against the net asset value, as derived from the value of two plots of freehold industrial land and a plot of leasehold industrial land with total land area of about 13 hectares, as well as an office building and covered factories located in Johor, Malaysia.
The purchase will be made in cash, with Soilbuild using both internal funds and bank borrowings.
Soilbuild said the acquisition would "benefit the group by further realising its vision to deliver optimal construction and management solutions to clients and to enhance shareholders value".
It cited the government's Industry Transformation Map for the construction industry - a blueprint used to guide restructuring of various sectors in Singapore - that wanted the industry to adopt leading technologies.
This means making use of "design for manufacturing and assembly" methodology in the industry, which employs the use of pre-fabricated construction elements. "The proposed acquisition will provide the group with additional plant facilities and machineries for the manufacturing and fabrication of premium precast building components and pre-finished volumetric construction modular components to further support the group's growth in this segment."
Shares of Soilbuild last traded at S$0.08, while shares of Sembcorp Industries closed on Wednesday at S$2.63, down one Singapore cent.