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PETALING JAYA: Agro-chemical producer Halex Holdings Bhd’s proposal to increase its stake in property developer Kensington Development Sdn Bhd (KDSB) has fallen through after conditions precedent to be satisfied within the stipulated timeframe lapsed.

In a filing with Bursa Malaysia, Halex said it had mutually agreed to terminate its conditional share acquisition agreement (SAA) with Bestempire Ltd “as the conditions precedent stipulated in the SAA have not been fulfilled within the agreed timeframe,” despite multiple time extensions.

“Pursuant thereto, the company and Bestempire had on Oct 20, 2016 executed a mutual termination letter which gives effect to the termination,” Halex said.

In October 2014, Halex accepted a conditional offer by Bestempire to acquire up to 2.5 million shares or a 50% stake in KDSB, via Halex Realty, for RM32mil cash.

This was on top of an existing 25% stake it had acquired for RM22mil in April that year.

Subsequently, on Jan 30, 2015, Halex had requested and obtained consent from Bestempire for an extension of the offer period of the conditional offer until March 20, 2015 to finalise its due diligence review.

On March 20, Halex entered into a conditional SAA with Bestempire to acquire the remaining 75% equity interest in KDSB for RM21mil cash.

The SAA was eventually mutually terminated after the three time extensions.

According to reports, the proposed acquisition of KDSB was part of Halex’s strategic plan to diversify into other viable businesses and enhance its profitability over the long term, rather then depending solely on its existing core business, which had been declining over the years.

“The additional revenue contribution to be derived from the proposed acquisition will provide an additional source of earnings, which is expected to enhance the group’s profitability and returns on shareholders’ funds,” Halex said in its announcement to the local bourse on March 20.

According to reports, KDSB owns over 15 acres of land in Kota Kinabalu, Sabah, which was planned for a mixed development known as 8 Avenue.

Based on reports, the project would encompass a shopping mall and a small office-versatile office block on two acres of land at an estimated gross development value (GDV) of RM150mil.

The 8 Avenue project was supposed to be jointly developed by KDSB and Bina Puri Properties Sdn Bhd, a wholly owned subsidiary of Bina Puri Holdings Bhd, reports claimed.

The remaining 13 acres of land, meanwhile, would feature commercial and residential units and have a potential GDV of RM1.1bil.

Halex reported a net loss of RM467,000 in its second quarter ended June 30, 2016, on a revenue of RM18.59mil.