Shin Yang Group has proposed to its board to diverify its business from shipping and add auto dealership as part of its holdings with the acquisition of Toyota brand dealer Boulevard Jaya, Boulevard Sabah and Boulevard Labuan for RM97.7 million.

Upon signing of the share sale agreement, SYG will pay 10% of the purchase consideration in the form of cash, being approximately RM14.5 million to the Vendors. If the Toyota dealership agreements are renewed prior to the completion of the proposed acquisition, the parties have agreed that balance of the purchase consideration of RM83.2 million will be satisfied upon the completion the deal. However the deal will be aborted if the dealership is not obtained with the amount paid to be refunded.

The group said barring any unforeseen circumstances and subject to the proposed acquisition being approved by the non-interested shareholders of the company, the board said it anticipates that the new automotive dealership business from acquiring the target companies may contribute 25% or more of the net profit of the group going forward.

SYG is principally involved in domestic, regional and international shipping, shipbuilding, ship repair, ship repowering, and refitting and fabrication of metal structures and deemed to be highly dependent on the Shipping Business, and Shipbuilding accounting more than 90% of the Group's total revenue for the past 3 years.

The proposals it said provide the group with the opportunity to expand and diversify its product offering and reduce reliance on its existing business. Although the group is currently not involved in automotive dealership business, the board said it believes that SYG has the capability and resources to diversify into the automotive dealership business by leveraging on the experience of its directors namely Ling Chiong Sing and Dennis Ling Lu Jing who are also directors of the target companies and have experience in the automotive dealership business.

The board said it is of view that the Proposed Diversification will be beneficial to the Group's financial performance and reduce reliance on the Group's existing businesses.