Teckwah Industrial Corporation Ltd (SGX:561) entered into a share sale and purchase agreement to acquire 70% stake in Profoto Digital Services Pte. Ltd. from Johnny Pranata and Lock Hui Koon for SGD 9.1 million on March 30, 2019. Teckwah will acquire 0.49 million shares consisting of 0.35 million shares from Johnny Pranata representing 50% stake and 0.14 million shares from Lock Hui Koon representing 20% stake. The consideration includes SGD 8.1 million to be paid on completion and SGD 1 million shall be paid into a fixed deposit bank account designated by Teckwah as security for payment of any shortfall pertaining to profit guarantee for operating profit before tax for any of financial years ending September 30, 2019, September 30, 2020 and September 30, 2021 to be not less than SGD 1.25 million, SGD 1.28 million and SGD 1.58 million respectively. Pursuant to the agreement, the remaining 0.21 million shares held by Lock Hui Koon may be sold either by Lock Hui Koon granting Teckwah a call option requiring Lock Hui Koon to sell to Teckwah the remaining shares which may be exercised at any time within the 3 year period from the date of completion of the transaction which will take place on April 30, 2019 or such other date as Teckwah, Johnny Pranata and Lock Hui Koon may agree or Teckwah granting Lock Hui Koon a put option requiring Teckwah to purchase from Lock Hui Koon the remaining shares, provided always that the operating profit before tax exceeds the profit guarantee in respect of any 2 of the 3 financial years ending September 30, 2019, September 30, 2020 and September 30, 2021. The put option may be exercised during the period commencing 1 month after the date of issue of Profoto Digital Services’ audited accounts for financial year ending September 30, 2021 or January 31, 2022, whichever is earlier, and ending on the date falling 30 days thereafter. SGD 3.9 million shall be paid to Lock Hui Koon if Teckwah exercises the call option, or Lock Hui Koon exercises the put option. The consideration will be funded by internal resources and/or bank borrowings of Teckwah. Upon closing, Profoto Digital Services and Profoto Malaysia Sdn. Bhd. will become subsidiaries of Teckwah. For the year ended September 30, 2018, Profoto Digital Services reported net profit of SGD 1.4 million. As at September 30, 2018, Profoto Digital Services reported unaudited net asset value of SGD 5 million. In connection with the agreement, Lock Hui Koon shall enter into a service agreement with Profoto Digital Services to provide his services as the Managing Director of Profoto Digital Services, on terms to be agreed. The transaction is subject to Johnny Pranata and Lock Hui Koon transferring their 80% stake in Profoto Malaysia to Profoto Digital Services for a nominal consideration. The transaction is expected to close on April 30, 2019 or such other date as Teckwah, Johnny Pranata and Lock Hui Koon may agree. The transaction is not expected to have a material effect on the net tangible assets per share or earnings per share of Teckwah for the financial year ended December 31, 2018, assuming that the transaction has been effected at the end of such financial year.