That’s the situation chicken egg producer LTKM Bhd found itself in when its RM336 million deal to acquire electronic manufacturing services (EMS) company Local Assembly Sdn Bhd was mutually terminated yesterday.
The news precipitated a 25 sen or 17.2% plunge in LTKM’s share price to RM1.20 this morning, prompting Bursa Malaysia to step in and suspend intraday short selling (IDSS) of its shares for the rest of the day.
In a bourse filing today, it said the short selling under IDSS will only be activated on the following trading day on Oct 9 at 8.30am.
In April 2022, LTKM had proposed to dispose of its existing chicken egg production business to become an electronic manufacturing services provider.
LTKM had said it would acquire the entire equity interest in Local Assembly for RM336 million, to be satisfied by RM100 million in cash and the issuance of 393.33 million new LTKM shares at 60 sen each.
However, in a stock exchange filing yesterday, LTKM said the two companies decided to terminate the proposed acquisition as both have experienced “different financial performance” following the execution of the latest supplementary letter agreement on May 10.
The company said as the proposed acquisition is inter-conditional with the other components of the proposals, they are therefore concurrently aborted.
“Although its projects are still ongoing, Local Assembly is facing unforeseen delays in their implementation by its major customers, while LTKM has returned to profitability from the egg subsidy by the government since the inception of the proposals.
“As such, both parties concluded that it is mutually beneficial to terminate the proposed acquisition and to respectively pursue any future strategies of their own,” it said.
LTKM said other than professional fees incurred for the proposals, the termination of the proposals is not expected to have a material adverse impact on it.
As at 3.44pm, LTKM’s shares pared its earlier losses and was down by 13 sen or 9% at RM1.32, giving it a market capitalisation of RM187.5 million.