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Pan Malaysia to take over A&W Malaysia for RM69.5mil, diversify into F&B business

Pan Malaysia Corporation Bhd (PMC) is set to enter the food and beverage sector with a 49% acquisition of A&W Malaysia for RM69.5 million.

The move aims to tap into the growing Malaysian fast-food market.

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1 year ago

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MALAYSIA: Pan Malaysia Corporation Bhd (PMC) is planning to diversify into the food and beverage (F&B) business by acquiring a 49% interest in A&W Malaysia Sdn Bhd for RM69.5 million (US$14.86 million) from Inter Mark Resources Sdn Bhd, in a related party deal.

The purchase price will be satisfied through a combination of RM41.7 million and the issuance of 111,127,352 new shares in PMC at RM0.25 a piece to Inter Mark, which is already a substantial shareholder of PMC.

PMC will seek shareholders’ approval to go ahead with the deal as it is expected to either, divert 25% or more of the net assets of PMC from its current operations or, contribute more than 25% of the group’s net profit.

PMC Group was principally involved in the manufacturing, marketing and distribution of confectionery and cocoa-based and other food products and investment holding.

The cash portion of the deal will be funded via a combination of the PMC Group’s internally-generated funds and the proceeds from the disposal of 2.43 hectare leasehold land in Petaling, Negeri Selangor for RM41 million, which was completed on August 30, 2023

The purchase was arrived at on a willing-buyer willing-seller basis based on the operating profit of the A&W Group of approximately RM17.72 million, which is the combined earnings before interest, tax, depreciation and amortisation (EBITDA) after deduction of the rental expenses of the A&W Group for the financial period beginning 1 Jan, 2022, to 31 Dec, 2022.

“The range of fair market value of the 49% equity interest in the A&W Group between
RM58.50 million and RM74.84 million as at 31 July 2023 being the date of opinion, as appraised by Strategic Capital Advisory Sdn Bhd, the independent valuer appointed by the company,” PMC said in a statement with Bursa.

It said the acquisition represents a strategic move for the PMC Group to grow the promising F&B business based on the historical performance of the F&B business since the completion of the initial acquisition and the positive prospects of the fast-food market in Malaysia.

“The company is optimistic that the proposed acquisition would contribute positively to the PMC Group’s earnings after taking into consideration the prospects of the A&W Group.

“Thus, the proposed acquisition is expected to provide the PMC Group with a good long-term profitable business with further growth opportunity in various parts of Malaysia.

“In addition, upon completion of the proposed acquisition, the entire earnings of the A&W Group will be attributable to the PMC Group,” it said.

Providence Strategic Partners Sdn Bhd projects the fast food market to grow from RM12.2 billion in 2022 to RM16 billion in 2025 at a CAGR of 9.5%.

The growth of the fast food market in Malaysia will be largely driven by recovery in post pandemic consumer spending; population growth and rising urbanisation; current lifestyle trends of the population; and mobile applications, electronic wallets, and social media as new marketing channels.

“Given the nostalgic brand memories with the baby boomers and the brand recognition amongst the millennials, product differentiation through proprietary drinks, for example, RootBeer and RootBeer Float and food such as beef coney, chicken coney, and curly rings, and an increased focus on convenience, cost, choice, consistency and cleanliness.

“The company expects the A&W Group will be able to capture an increasing share of the expanding quick-service restaurant market in Malaysia.

“Premised on the above and the positive outlook of the fast-food market in Malaysia, the company is optimistic of the long-term prospects and outlook of the A&W Group and is of the opinion that the proposals are expected to contribute positively to the future earnings of the PMC Group,” it said.

A&W Malaysia was the first fast-food restaurant in Malaysia when it started operations in 1963.

Currently, the A&W Group operates 97 outlets in Peninsular Malaysia and three outlets in East Malaysia. The A&W group is expected to continue its expansion in Malaysia with an aim to open an additional 65 outlets by year 2027. The expansion will be funded through internally generated funds and external financing.

The A&W Group recorded a loss after tax of RM7.97 million for the 18 month period ended 30 June 2023 mainly due to higher cost of sales and operational costs of RM229.35 million from lower gross profit margin due to increase in cost of raw materials; and increased labour costs, particularly for the last six months of the financial period under review, due to additional cost incurred to overcome staff shortage issues and reliance on foreign workers.

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Business

Taiwan’s FSC rejects CTBC Financial’s bid to acquire Shin Kong Financial, favoring Taishin’s merger plans

Taiwan’s Financial Supervisory Commission rejected CTBC Financial’s tender offer to acquire Shin Kong Financial, raising concerns about its plan, while Taishin Financial moves closer to a merger with Shin Kong. Both companies have scheduled shareholder meetings for 9 October.

Published

3 days ago

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17 September 2024

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On 16 September 2024, Taiwan’s Financial Supervisory Commission (FSC) rejected an application from CTBC Financial Holding Co. to launch a tender offer for Shin Kong Financial Holding Co., potentially clearing the path for Taishin Financial Holding Co. to proceed with its proposed merger with Shin Kong Financial.

Jean Chiu, vice chairperson of the FSC, stated at a press conference that CTBC Financial failed to provide a comprehensive implementation plan for the acquisition. CTBC had proposed acquiring between 10% and 51% of Shin Kong Financial’s shares initially, with plans to later fully integrate the company.

However, the FSC raised concerns over CTBC’s lack of detailed provisions on how it would manage various potential outcomes, particularly if it failed to secure full control of Shin Kong.

Additionally, the FSC highlighted gaps in CTBC’s understanding of the financial health of Shin Kong’s life insurance subsidiary, as well as a lack of firm commitments regarding raising the capital size of this subsidiary.

This uncertainty, combined with the method of payment proposed by CTBC—using a mix of cash and its own stock—raised concerns that the tender offer could negatively affect shareholders due to potential fluctuations in CTBC’s stock price during the transaction process.

CTBC’s proposal, announced on 20 August, included an offer of NT$4.09 (US$0.13) per share in cash and an exchange of 0.3132 CTBC shares for each Shin Kong share, amounting to NT$14.55 (US$0.46) per share. This bid was labeled by Taishin Financial as a hostile takeover attempt, as Shin Kong Financial’s board had not approved the offer.

In response, Taishin Financial, which has been vying for Shin Kong through a merger, revised its stock swap offer on 11 September.

The new offer included 0.672 Taishin shares plus 0.175 preferred shares for each Shin Kong share, translating to NT$14.18 per share—closer to CTBC’s offer. Taishin had earlier disclosed on 22 August its original plan to offer 0.6022 shares of its stock per Shin Kong share, which amounted to NT$11.32 (US$0.36).

Chiu emphasized that tender offers based on stock payments are rare in Taiwan, with only six cases since the 2002 revision of tender offer regulations.

She referenced Fubon Financial Holding’s acquisition of Jih Sun Financial in 2023, where cash was used instead of shares, to highlight how tender offers have traditionally been handled in the local market.

Chiu concluded by stating that although Taiwan’s financial market operates on free-market principles, takeovers should avoid disrupting market order and respect corporate stability.

Taishin Financial and Shin Kong Financial are set to hold a special general meeting on 9 October to secure shareholder approval for their merger plan, which will then require the FSC’s endorsement.

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Business

Times Bookstores to close after nearly four decades in Singapore

Times Bookstores will cease operations in Singapore after nearly four decades, with its final outlet at Cold Storage Jelita closing on 22 September 2024. The closure is seen as being attributed to high rents, low sales, and rising operational costs, reflecting challenges faced by physical bookstores in Singapore.

Published

4 days ago

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16 September 2024

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Times Bookstores will end its operations in Singapore after nearly 40 years, as its last remaining outlet at Cold Storage Jelita on Holland Road is set to close on 22 September 2024.

In a farewell statement posted on Instagram on 16 September, the English book retailer, established in 1978, invited customers to visit the store one final time. “Our happily ever after has finally come,” the post read. “It is with both a heavy heart and a sense of fulfilment that we announce the closure of Times Bookstores.”

The closure of Times Bookstores has been anticipated for several years. The company, owned by regional consumer group Fraser and Neave Limited, closed its branches in Plaza Singapura and Waterway Point in February 2024.

The shutdowns triggered a discussion in Singapore’s literary community about how to better support bookstores.

Struggles Facing Book Retailers

Times Bookstores has been affected by increasing rent, low sales, and rising operational costs. The Covid-19 pandemic exacerbated its challenges, with the business quietly closing outlets at Marina Square and Paragon in 2021.

A key warning came in 2019 when the retailer closed its 8,000 sq ft Centrepoint branch, once one of Singapore’s largest bookstores.

These closures reflect a broader struggle for physical bookstores in Singapore. Rising rent, higher goods and services taxes (GST), and increasing printing costs have driven book prices up, making it difficult for traditional retailers to compete.

Popular bookstore also shut its Marine Parade outlet on 18 June 2023, citing similar reasons, while Books Kinokuniya closed its JEM branch on 9 May 2022 due to slow sales and rental costs.

Future of Singapore’s Bookstores

Following the closure of Times, few large bookstore chains remain in Singapore. Books Kinokuniya, the largest bookstore in Singapore, continues to operate its flagship store at Takashimaya Shopping Centre.

According to a spokesperson from Toshin Development Singapore, cited by the Straits Times, Kinokuniya remains a key tenant, though no specific renewal dates were disclosed. The spokesperson added that Kinokuniya continues to engage with the landlord regularly to appeal to patrons and remain in trend.

Although Times Bookstores will no longer have physical stores in Singapore, its book distribution business, which supplies books from international and local publishers to other retailers, continues to operate.

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