Alpha Fire to acquire Icon Engineering in Rs. 260 m share swap, eyes Rs. 1 b revenue milestone

Alpha Fire Services PLC has announced plans to acquire 100% of Icon Engineering Enterprises Ltd., for Rs. 260 million through a share swap, a move that will expand the listed engineering company’s presence in the heating, ventilation and air conditioning (HVAC) sector while positioning it as a full-service mechanical, electrical and plumbing (MEP) turnkey solutions provider.

The proposed acquisition, approved by the Board of Directors, involves the purchase of all 10,000 issued shares of Icon Engineering from Mayfair Capital Ltd., K.M.A. Viraj Fernando, and J.A.R. Wijeyesinghe. The consideration will be settled through the issue of 9,122,807 new ordinary voting shares in Alpha Fire by way of a private placement.

The transaction values Icon Engineering at Rs. 260 million based on an independent valuation carried out by KPMG. For the purposes of the share swap, the Board has determined the issue price of the new Alpha Fire shares at Rs. 28.50 each, having concluded that the consideration is fair and reasonable to both the company and its existing shareholders.

Under the share swap, Mayfair Capital will receive 6,385,965 new Alpha Fire shares, while Fernando and Wijeyesinghe will each receive 1,368,421 shares. The agreed swap ratio is 912.2807 new Alpha Fire ordinary voting shares for every one share held in Icon Engineering.

Alpha Fire said the acquisition is expected to significantly strengthen the group’s financial performance. The combined operations of Alpha Fire and Icon Engineering are expected to generate revenue exceeding Rs. 1 billion, while overall profitability is projected to increase by 30%.

The company also expects the acquisition to enhance foreign currency earnings, with Icon Engineering’s project portfolio in the Maldives generating revenue in US dollars. 

Alpha Fire described the transaction as a key strategic initiative that advances its long-term growth strategy by combining Icon Engineering’s HVAC expertise with Alpha Fire’s established fire protection and engineering capabilities, enabling the group to deliver integrated building systems solutions.

The company said the acquisition would strengthen its competitive position while enhancing long-term stakeholder value.

Following completion of the transaction, the new shareholders will collectively hold 19.38% of Alpha Fire’s enlarged issued share capital. The company’s current stated capital is Rs. 76,429,460.

The proposed acquisition constitutes a major transaction under Section 185 of the Companies Act, No. 7 of 2007 and remains subject to approval in principle from the Colombo Stock Exchange (CSE) for the issue and listing of the new shares, as well as shareholder approval at a General Meeting.

Alpha Fire also disclosed that the acquisition constitutes a related-party transaction under the CSE Listing Rules. Mayfair Capital is considered a related party because its shareholders are also shareholders of ATX Partners Ltd., which, together with parties acting in concert, currently holds 60.13% of Alpha Fire’s issued shares. In addition, Fernando and Wijeyesinghe are Directors of the company.

The company’s Related Party Transactions Review Committee concluded that the transaction was conducted on arm’s length terms and is not prejudicial to the interests of Alpha Fire or its minority shareholders, relying on KPMG’s independent valuation and opinion in reaching its determination.