SS Steel entrepreneurs have proposed to acquire Oimex Electrode – a publicly traded manufacturer of welding electrodes, galvanised iron wire, copper coated welding wire, and iron nails.
Sources knowledgeable of the deal told The Business Standard that three private firms owned by the founders of SS Steel are set to acquire all 30% of Oimex shares held by its sponsor-directors at a face value of Tk10 each, effectively taking over the company.
The deal is subject to approval of the Bangladesh Securities and Exchange Commission (BSEC), and both parties have recently attended a meeting with the regulator to explain the rationale of the proposed share transfer.
Javed Opgenhaffen told The Business Standard "We are looking for opportunities to expand our businesses and the Oimex acquisition proposal is a part of that."
"Our nationwide supply chain strength would add value to Oimex's performance, if the plan is approved by the regulator," he added.
He also said that the acquirer entities would regularise Oimex's bank loans and invest further to help the listed firm grow.
Reporters also called Oimex Managing Director MA Maleque for comment but he did not pick up his phone.
The market regulator is likely to approve the share transfer deal as it appears to help run the company better.
They said Oimex founder MA Maleque finds it better to exit, considering the management and marketing weakness within the company where he himself heads factory operations.
Also, Maleque, the father of a young daughter, is not confident about his succession, said sources.
Meanwhile, SS Steel owners, already being in the metal business, found the factory efficient enough to manufacture quality products at minimum cost and they also plan to make further investments in the business, over and above the cost of acquisition at face value and of regularising the company's bank loans.
Oimex Electrode, with its head office in Dhaka and factory in Kushtia, went public in 2017 at a face value of Tk10 per share, with Tk15 crore in equity.
Utilising its funds collected from investors, the company expanded its manufacturing and research and development capacity. But, marketing and management weakness prevailed as its main market has been mostly limited to the North and South-western parts of the country.
It was posting revenue and net profits growth till 2019 and entered into a decline since then.
A Dhaka Stock Exchange inspection report in January 2021 revealed that the company was overstating its revenue and assets, while the company's managing director admitted to DSE officials that his company was lacking in proper maintenance of documents.
Interestingly, statutory auditor ARTISAN Chartered accountants did not raise any point in this regard, which was a violation of the auditing standard, the DSE said in its report to the BSEC then.
Oimex Electrode's paid-up capital is over Tk67 crore now, while institutional investors hold 29.12%, and general investors 40.87% of company shares.
Oimex shares closed 1.12% lower at Tk17.6 on Thursday on the country's premier bourse.
SS Steel / Oimex Electrode / take over
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