GDS Global Limited Announces Very Substantial Acquisition of Asiabuild Metal Engineering and Integrated Aluminium, Diversifies Business and Issues New Shares as Consideration 1

Strategic Business Diversification

GDS Global will expand its core business to include the design, fabrication, supply, and installation of structural steel, metal works, and architectural aluminium solutions. This includes:

Structural steel components (linkways, shelters, pavilions, trellises, roof trusses)
Metal works (railings, gratings, catwalks, metal structures)
Aluminium cladding for lift shafts and related structures
Architectural aluminium systems (windows, doors, façades, curtain walls, cladding, sunshades, canopies)
Integrated aluminium and façade works for schools, commercial, industrial, and residential developments

The group will target public infrastructure, residential, commercial, mixed-use, institutional, and industrial sectors, potentially through joint ventures and strategic alliances.

Potential Impact on Shareholders and Share Price

1. Massive Share Issuance and Dilution

The acquisition will result in the issuance of up to 405,000,000 new shares (including those for debt purchase), representing 176.3% of existing share capital and about 63.8% of the enlarged share capital. This significant dilution is price sensitive and may affect share values.

2. Change in Control – Mandatory General Offer Waiver

After the deal, the Vendor Family Group (Mr. Tang Hee Sung, Mdm. Seow Heng Choo, Mr. Seow Seng Wei) will collectively own approximately 55.6% of the enlarged share capital, triggering a mandatory general offer under the Takeover Code. A Whitewash Waiver is being sought from the Securities Industry Council to waive this requirement. This is a critical development for shareholders.

3. Interested Person Transaction – Shareholder Approval Required

The transaction is an interested person transaction under SGX rules, with value far exceeding the 5% threshold (398.2% of latest audited NTA). Independent shareholder approval is mandatory, and certain key parties will abstain from voting.

4. Financial Effects – Immediate Revenue & Profit Boost

The acquired businesses are profitable. Combined unaudited net profit after tax for 2024 is about S\$1.9 million. Pro forma financials suggest an uplift in net asset value (NAV) per share and a turnaround from loss to profit for GDS Global.

	Before Acquisition	After Acquisition (Base)	After Acquisition (Max Deferred)
NAV per Share (cents)	3.23	5.35	6.30
(Loss)/Earnings per Share (cents)	(0.06)	0.44	0.28

5. Deferred Consideration – Earn-Out Structure

Deferred consideration is tied to financial performance in 2026 and 2027, with formula-based earn-outs for up to S\$18 million (225 million shares). Shortfalls or overachievement in profit will adjust the number of shares allotted. This performance-based element could affect future dilution and share price.

6. Moratorium and Non-compete Undertakings

Vendors will be subject to moratoriums on their new shares and non-compete agreements for up to 12 months post-control or employment, protecting GDS’s interests and potentially stabilizing post-acquisition share trading.

Other Critical Details

Extraordinary General Meeting (EGM): Shareholders will be invited to vote on the acquisition, share issuance, diversification, adoption of new mandates, and the Whitewash Resolution.
Independent Financial Adviser: To be appointed to opine on the transaction’s fairness for minority shareholders.
Listing Application: For the new shares to be admitted to trading on SGX-ST.
No new directors or service contracts are proposed as part of the acquisition.
Documents available for inspection at the company’s registered office for three months.

Why This Is Price Sensitive and May Move the Share Price

Significant dilution: Existing shareholders’ interests will be heavily diluted if the deal closes at the maximum share issuance.
Change of control: The Vendor Family Group will become controlling shareholders.
Strategic shift: Diversification into new, profitable business lines could improve GDS’s growth prospects, revenue streams, and resilience.
Performance-based earn-out: Future share issuance is tied to profit, introducing uncertainty and upside/downside risk.
Immediate uplift in profitability and NAV per share may enhance investor confidence, but is counteracted by dilution risk.
Shareholder approvals and regulatory waivers: Any hiccups in getting approvals or waivers may derail the deal, creating volatility.

What Investors Should Do

Read the forthcoming EGM circular and IFA opinion carefully.
Monitor announcements for regulatory approvals, valuation reports, and final terms.
Assess personal risk tolerance given the dilution, change in control, and new business lines.
Consult professional advisers if in doubt.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. The information is based on public disclosures and may be subject to change as further details emerge. Investors should consult their own professional advisers and exercise caution when making investment decisions related to GDS Global Limited.