Daibochi plans to fully acquire Malaysia-based firm Mega Printing and Packaging (MPP).
The MYR125m ($30.15m) deal is expected to strengthen Daibochi’s position in the FPP segment.
Based in Melaka, MPP manufactures downstream flexible packaging solutions such as roll-form and pre-made pouches with laminated structures.
The company’s main focus is on the food and beverage applications, including confectionary, snacks, noodles and powdered beverages.
Daibochi will fund the total consideration of the transaction through internally generated funds and/or bank borrowings.
Daibochi managing director Thomas Lim said: “The exercise not only combines our respective prowess in product portfolio and manufacturing capacities, but also extends our reach through the wider network of customers and suppliers.
“From a larger perspective, MPP would come onboard the Scientex growth partnership platform within the Daibochi fold to fulfil increasing demand from multinational corporations and brand owners locally and abroad.”
Both companies will pool resources such as human resources, technical expertise and market insight, as well as enhance raw material purchases and other efficiency measures to serve their customers.
The deal will combine MPP’s manufacturing plant in Kawasan Perindustrian Teluk Emas, Melaka with Daibochi’s facilities in Ayer Keroh and Jasin, Melaka bringing the total production capacity to 792.53 million metres to 1,056.53 million metres of FPP per annum.
The transaction is currently subject to the approval of the board of directors and shareholders of Daibochi and is expected to close in the third quarter of this year.
Last month, Scientex completed the acquisition of 42.41% stake in Daibochi following a share sale by several Daibochi vendors and conclusion of the mandatory general offer by the former.