KUALA LUMPUR (March 4): Oil and gas services outfit Deleum Berhad is seeking to acquire a 70% stake in valves company OSA Industries Indonesia (OSAII) for US$7 million (RM33.1 million) to fortify its power and machinery (P&M) business in Indonesia.

The acquisition by wholly-owned Deleum Services Sdn Bhd represents 70% of OSAII’s total valuation of US$10 million, subject to due diligence and finalisation of definitive agreements, Deleum said in a statement.

Deleum has entered the heads of agreement (HOA) with five parties, including OSAII and its shareholders Ong Siow Aik and OSA Industries Pte Ltd, to undertake due diligence on the acquisition target.

The HoA entails all parties to collaborate over a six-month period in facilitating Deleum’s due diligence on OSAII and PT OSA Megah, as well as to negotiate and finalise the definitive agreements for the proposed acquisition, Deleum said.

“The HoA signifies Deleum’s strategic direction and commitment to strengthen its regional presence in the region, to create synergies and aims to bolster the group’s earnings as well as its shareholder value.

“The proposed acquisition is also being supported by an international service company with whom both Deleum and OSAII have had a good working relationship over the years,” Deleum said.

OSAII, headquartered in West Java, Indonesia, has built a “reputable presence” in the region, Deleum said.

Established in 1994, OSAII specialises in the repairing, reconditioning and testing of valves, offering expert solutions to ensure optimal functionality. It also provides a diversified inventory of valves and supplies, it added.

Deleum group chief executive officer Rao Abdullah said the HOA represents the critical first step towards realising the Indonesian expansion.

“Growing our presence in Indonesia is our strategic goal, given the enormous potential for our business growth in this market.

“We are committed to using this cooperation as a springboard for our larger goal, capitalising on the numerous opportunities that the Indonesian market offers us.

“As we proceed with due diligence and negotiation, we remain focused on delivering sustainable outcomes that align with our vision of being a leading player in the region,” he said.

The proposed acquisition by Deleum, one of a few local-listed oil and gas services providers in net cash position, came just a week after the company signed two separate agreements to strengthen its portfolio of services.

The first agreement was inked with Paradigm Technology Services BV, to introduce cost-efficient slickline operations that will elevate efficiency and productivity within oilfield services operations.

The second was with LatConnect 60 Ltd to promote eMission60, a state-of-the-art methane emissions monitoring solution provider who leverages on satellite data analytics to deliver precise methane monitoring and help clients meet sustainability objectives.

Deleum declared dividends of 5.7 sen per share for the financial year ended Dec 31, 2023, as the group's net profit rose 8.53% year-on-year to RM45.74 million or 11.39 sen per share, from RM42.14 million or 10.49 sen per share. Revenue rose 13.46% to RM791.99 million, from RM698.05 million.

As at end-December, it had net cash of RM214.83 million.

Deleum shares closed 1.61% or two sen higher at RM1.26, giving it a market capitalisation of RM505.96 million. The counter, which has gained 31% this year, has a historical dividend yield of 4.52%.