This article first appeared in The Edge Malaysia Weekly on April 21, 2025 - April 27, 2025

Loss-making Widad Group Bhd (KL:WIDAD) has proposed to diversify its business by acquiring a piece of land for development in Negri Sembilan from a subsidiary of Hextar Technologies Solutions Bhd (KL:HEXTECH).

The transaction, valued at RM31.3 million, which Widad will pay via the issuance of shares at 0.0315 sen, will see Hextech’s subsidiary being the single largest shareholder with 24.2%. Hextech is majority owned by Datuk Eddie Ong Choo Meng, who also holds a significant stake in Widad.

Based on Widad’s annual report, Ong has 4.9% in the company, whose major shareholder prior to the deal with Hextech was Tan Sri Muhammad Ikmal Opat Abdullah. Muhammad Ikmal’s shareholding in Widad will be reduced from 13.6% to 10.3% after the company completes the land acquisition.

According to Hextech, it plans to dispose of the shares in Widad and use the proceeds to invest into its technology business, particularly MoneyX, which is the company’s fintech platform.

Hextech’s contention is that the shares of Widad have better liquidity than the land, hence the deal would help the company monetise the asset faster. Clearly, the land cannot be developed in the immediate term, which is why Hextech prefers Widad’s shares to the asset.

Considering the situation, how would the land diversify Widad’s business in the immediate term?

Also, Hextech’s intention to sell the shares means that Widad’s shares would come under selling pressure.

A company with contracts for facility management, Widad has already been hammered down to a penny stock a year ago.

Can Hextech dispose of the shares and realise a gain from the exercise, considering the poor sentiments on Widad?

Also, the corporate exercise means that Widad is likely to have a new majority shareholder. Until Hextech’s sell-down is completed, Widad would be mired in an overhang.

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