In late 2017, mainboard-listed Datapulse Technology became the centre of one of Singapore's fiercest corporate governance battles after its new controlling shareholder pushed through a S$3.5 million acquisition of a Malaysian haircare maker within days, without what the board itself admitted was extensive due diligence, enraging minority shareholders.
Datapulse, a former manufacturer of media storage products whose core business had been deteriorating for years, changed hands on 22 November 2017 when Ng Siew Hong emerged as the new controlling shareholder. A new board was appointed on 11 December 2017. Within six days, it approved the S$3.43 million acquisition of Wayco Manufacturing, a Johor-based maker of haircare, personal care and household chemical products, from vendor Ang Kong Meng.
Minority shareholders cried foul. Wayco had earned profits of just S$41,665 in 2016 and S$106,404 in 2017, meaning Datapulse paid multiples of 84 and 33 times earnings. More alarmingly, the company had essentially one customer, Way Company, which was itself solely owned by the vendor Ang Kong Meng. It then emerged that Ang and Ng Siew Hong were the only two shareholders of a private vehicle, Anone Investment, raising questions about whether the deal enriched the controlling shareholder's associates.
The Singapore Exchange demanded Datapulse notify it ahead of any future acquisitions involving Ang, after the board admitted in a letter to SGX that it had not conducted extensive due diligence because the former chief executive had previously worked at Wayco and was familiar with it. Dissident shareholder group Ascapia Capital published an open letter urging minorities to reject the board's plans.
On 26 March 2018, Datapulse's four directors faced about 70 minority shareholders at a dialogue hosted by the Securities Investors Association of Singapore, where they defended the diversification from the loss-making media storage business. The board commissioned Ernst & Young to conduct a strategic review of Wayco, and newly appointed executive director Wilson Teng unveiled a 100-day plan to build the haircare brands ahead of a crucial shareholder vote on 20 April 2018 on whether to retain the board.
The Datapulse affair became a landmark case study in Singapore of how control transactions can ride roughshod over minority interests, and of the SGX and SIAS stepping in when shareholders cry foul. It cemented the haircare acquisition as shorthand for hasty, related-party dealmaking in the local market's collective memory.
The new board's case rested on diversification: with the Tai Seng factory sold in January 2018 and the media storage business dormant, directors argued Wayco's haircare brands could be nurtured into a regional personal grooming business. Executive director Wilson Teng, appointed in March 2018, unveiled expansion plans ahead of the April vote, but minority shareholders remained unconvinced that a hasty S$3.5 million bet was the right prescription.