Regent Textile Mills is going to acquire a 99 per cent stake in Legacy Fashion for Tk 83.01 crore to expand its business portfolio.
The value was determined based on the company's net asset value mentioned in its financial statement as of June 30, 2020.
"We are going to buy it in order to build our forward linkage of textile which would be needed for setting up the composite plant," said Riajul Hoque Sikder, company secretary of Regent Textile.
"We promised our investors in the initial public offering (IPO) period that we want to transform ourselves into a composite plant and this is a step towards that goal," he added.
The textile company informed its stock investors about the development yesterday through the of Dhaka and Chattogram bourse websites.
As the news broke, stocks of Regent Textile, listed with the bourses in 2015, rose 1.92 per cent to Tk 10.60 as of yesterday.
Legacy Fashion is an export-oriented garment company established in 2006.
The factory is located in the BSCIC Industrial Estate in Kalurghat, Chattogram, which has the nomination of prominent and branded international buyers. Its average yearly turnover has been over Tk 300 crore for the past three years.
Regent Textile's Tk 80 crore investment in the garment business was previously approved by its shareholders in an extraordinary general meeting held on August 27, 2020. The remaining amount will come from other sources.
Regent Textile's paid up capital was Tk 127 crore and it has a reserve and surplus of Tk 165 crore.
The textile company raised Tk 125 crore in funds from the stock market to modernise, expand and purchase a garment factory.
It started commercial operations of its new unit after raising the fund through its IPO proceeds, enabling it to raise its fabric production capacity by 233 per cent, or one lakh metres per day.
The company disbursed 5 per cent stock dividend among its investors for the fiscal year that ended on June 30, 2019.
That year, its profit dropped 12 per cent to Tk 11.79 crore compared to the same before a year before.