LOCAL telco M1, through its indirect subsidiary AsiaPac Technology, will acquire up to 70 per cent stake in Malaysia-based Glocomp Systems and its 2 affiliate companies for RM111 million (S$36 million) as part of M1's continued expansion into the cloud services business. 

The deal will see Global Computing Solutions (GCS) and GCIS restructured as subsidiaries of Glocomp and managed by a unified management team, said M1 in a statement on Wednesday (Dec 1).

The remaining 30 per cent stake in Glocomp will continue to be held by its founders.

Collectively, the Glocomp group are information and communications technology (ICT) solution providers with solutions in areas of cybersecurity, enterprise systems and multi-cloud infrastructure.

AsiaPac will acquire an initial 26 per cent stake in Glocomp for RM26.3 million, funded via a combination of subscription of new ordinary shares to be issued by Glocomp, and purchase of ordinary shares from Glocomp founders Liew Yoon Kit, Giam Teck Eng, Chan Yue Mun and Chan Tze Ming, said M1's parent company Keppel Corporation in a separate statement.

The initial tranche is expected to be completed by the first half of 2022.

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The parties have entered into certain put option and call option arrangements for AsiaPac to purchase additional ordinary shares from the vendors, which will increase AsiaPac's stake in Glocomp to up to 70 per cent of the total issued share capital of Glocomp over 2 further tranches.

The aggregate purchase price for the further tranches will be calculated based on mutually agreed formulae not exceed RM84.7 million.

Assuming completion of the initial and further tranches, the maximum aggregate purchase price for 70 per cent of the total issued share capital of Glocomp will not exceed RM111 million, to be paid in cash.

This will be funded by AsiaPac through internal resources, said Keppel.

M1 said the Glocomp acquisition is a natural extension of its cloud services business and marks the initial expansion into other regional markets, starting with Malaysia.

"Importantly, Glocomp’s expertise in the ICT sphere helps M1 to advance Keppel’s Vision 2030 and continuously create value for enterprises through innovative technology and digital solutions,” said M1 chief Manjot Singh Mann.

The audited net asset value and book value of Glocomp, GCS and GCIS are approximately RM62 million, RM3.6 million and RM7.6 million respectively as at Dec 31, 2020.

Keppel shares closed up 1 Singapore cent or 0.2 per cent to S$5.11 on Wednesday.