Singapore Technologies Engineering (ST Engineering) today announced that its electronics arm, Singapore Technologies Electronics (ST Electronics), has entered a conditional share purchase agreement to acquire a 51% equity interest in SP Telecommunications (SPTel) from Singapore Power (SP) (Proposed Transaction) for a purchase consideration estimated at S$54m, to be finalised post-closing, subject to a maximum of S$60m (Purchase Consideration). SP will retain a 49% equity interest in SPTel.

SPTel owns, builds and operates communication and infrastructure services in Singapore. It owns an extensive network of fibre optic back-haul infrastructure and facilities.

The Purchase Consideration will be funded internally by ST Electronics and will be satisfied fully in cash on closing, and was arrived at, after arm’s length negotiations between the parties, taking into account SPTel’s net assets, current financial performance and future growth prospects. The unaudited consolidated net tangible assets (NTA) of SPTel as at 31 October 2016 is S$100m.

Subject to regulatory approvals, the Proposed Transaction (PT) is anticipated to close by the second quarter of 2017. Upon closing, ST Electronics, SP and SPTel will enter into a shareholders’ agreement to regulate the respective rights and responsibilities of ST Electronics and SP as shareholders of SPTel.

The PT is in line with ST Electronics’ strategy to build a more comprehensive suite of Info-Communications Technology (ICT) solutions and services in areas such as Smart City.

The combination of the ICT expertise of ST Electronics and the assets of SPTel will further enhance ST Electronics’ capabilities in providing ICT solutions for enterprise customers.

The PT is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.