Singapore-based electronics manufacturing services provider Radiance Group has completed the reverse takeover of Global Invacom Holdings Limited, a UK–based satellite communications equipment specialist, for approximately US$49m.
The complex…
Singapore-based electronics manufacturing services provider Radiance Group has completed the reverse takeover of Global Invacom Holdings Limited, a UK–based satellite communications equipment specialist, for approximately US$49m.
The complex transaction, which has been on the cards for over two years, finally took place after the minority shareholders in Singapore stock exchange-listed Radiance approved the deal by 57.2% to 42.8% at an extraordinary general meeting on 15 June.
Following that EGM, Radiance made a cash payment of US$18.5m to the private owners of Global Invacom. The balance of the consideration, approximately US$30.5m, was then paid via the issue of 122.5 million new Radiance shares at S$0.3087 per share to the vendors.
In addition, a further 41.14 million shares have been allotted and issued, again at S$0.3087 per share, to the escrow agent Stanford Law Corporation and will be held in escrow to meet SGX listing guidelines on the enlarged group’s market capitalisation.
On completion of the deal, Radiance has changed its name to Global Invacom and will trade under this name on the SGX. The merged entity has proforma 2011 revenue of S$138.3m (US$109.5m) and post-tax profit of S$11.9m (US$9.4m).
Radiance stated that the merger will integrate the satcoms research & development and sales expertise of Global Invacom with Radiance’s manufacturing operations in China. Global Invacom, which counts DTH providers BSkyB and Dish Network among its customers, will now seek to expand into new markets in Asia as well as into the marine satcoms sector.
Tony Taylor, executive chairman of Radiance as well as managing director of Global Invacom, commented: “The change of name marks a new chapter as the merged entity embarks on a new identity and corporate strategy which will combine the high-tech satcoms design and front-end customer interface with the lower-cost manufacturing operations in China. It reflects our shift from an electronics manufacturing services provider to a fully integrated satcoms equipment provider.”
“Under the Global Invacom umbrella, we will streamline the merged entity to yield synergies as we pursue new businesses, particularly satcoms related opportunities in Asia,” he added.
During the 2008-2009 global financial crisis, Radiance’s controlling shareholder, Thumb (China) Holdings Group Limited, ran into financial difficulty and its 52.41% stake was publicly auctioned. In order to protect its supply chain, Global Invacom, which has been a significant customer of Radiance since 1999, purchased the stake for S$10.53m (US$8.3m) in 2010. This triggered a mandatory general offer which saw Global Invacom increase its stake to 59.08%.
Since then, the management and boards of both companies have discussed a potential merger. The logic of a deal became more compelling as Radiance faced rising labour and material costs in China, with the company’s operational-related costs denominated in a rising Renminbi while revenues were denominated in US dollars. The
Radiance added that competition in the Chinese electronics manufacturing services has led to aggressive price-cutting and consolidation.
DMG & Partners Securities acted as financial adviser to Radiance on the transaction, while Religare Capital Markets Corporate Finance acted as placement agent on the share issue. Provenance Capital acted as independent financial adviser to the shareholders of Radiance.
