MANY business owners would balk at selling their company and giving up control.
But Joe Lau, founder and majority share owner of JEP Precision Engineering Pte Ltd, the takeover target of Sesdaq-listed Alantac, sees it as the next stage in growing a business and making it a public company, which has been his dream all along.
"There are two ways to do business. First is to keep it within the family and the second is to not think about the money and just do what's best for the company and fulfil your dream," he says.
"I am doing it the second way. For me when I am doing business, I am going after recognition and success. That is how I have been able to push myself. And what I really want to do is grow the company to an extent that everybody can recognise that I have done a good job."
Alantac, a precision part maker mainly for the semiconductor industry, is proposing to acquire 85 per cent of JEP, a manufacturer of precision machining components for the aerospace, oil and gas and machine tool industries, for $23.8 million.
Alantac will pay for the JEP stake in part by cash payments funded by bank loans and proceeds from a proposed convertible notes issue. It will also pay $3.4 million in the form of 23 million new Alantac shares at 14.8 cents a share to Mr Lau.
Alantac is holding an EGM today for its shareholders to decide whether to approve the deal.
Mr Lau says that if the deal goes through, he will be made vice-chairman and group MD on the board of Alantac upon completion of the acquisition. He also intends to raise his stake in the company to become one of the highest individual shareholders.
"So with all that, I'd still be in the driver's seat. In fact, there'd be more responsibilities on my shoulders to consolidate the two companies," he says.
Even before the acquisition proposal came along, Mr Lau was already preparing to an initial public offering of JEP on SGX and was prepared to shed some control over the company, he says.
Whether it was through an IPO or through a buyout, JEP was looking for more funds in order to expand, because the capital expenditure needed in such a business is very high.
"What we are trying to do is to grow the company to the next level, get more regional work done, and to get recognition that we can, as an SME company, do major aerospace contracts. In fact, we are already receiving attention directly from GE and Rolls-Royce. But we have not reached a level where we could compete directly with MNCs, so we need to raise JEP to that level," he says.
The company was started by Mr Lau, with one other partner, in 1990. Prior to that, Mr Lau had 25 years of experience in the precision parts business in the aerospace industry in manufacturing and sales roles. With the contacts he made, he needed only about $40,000-$50,000 to start the business as he was able to get flexible payment terms from his contacts in the industry.
Initially, JEP started off making smaller less critical parts (up to only 10 inches in diameter) of planes but about 5-6 years ago, it begin to clinch contracts for bigger parts (up to 2 metres in diameter) such as engine casings.
Soon more partners joined in the business, but a few years ago when the company hit a rough patch due to the 9/11 attacks and the Sars outbreak, Mr Lau bought out his partners and turned the company around. That soon attracted EDB Ventures and Singapore Aerospace Manufacturing to come in as investors with stakes of about 20 and 15 per cent respectively.
JEP, which has been doing ad hoc precision parts projects for the oil & gas industry, took a major step in the direction earlier this month with a $20 million contract from Aker Kvaerner, a global provider of engineering and construction services, technology products and integrated solutions.
Mr Lau says he wants contracts from the oil & gas industry to contribute to 20 per cent of JEP's revenue by the end of 2008.
The company had a turnover of $17 million and a profit of $3.6 million last year.
