Daibochi shareholders say yes to acquisition of Mega Printing & Packaging for RM125m

PETALING JAYA: Daibochi Bhd has secured shareholders’ approval to acquire the entire equity of flexible plastic packaging player Mega Printing & Packaging Sdn Bhd (MPP) for RM125 million cash.

Daibochi managing director Thomas Lim said in a statement that the acquisition was opportune in positioning the group favourably to capture FPP demand in Malaysia and abroad.

“Vitally, this acquisition sets a new base in our market share for food and beverage (F&B) packaging in the region. Daibochi’s predominantly multinational clientele would be complemented by MPP’s customers mainly comprising local players. Together, we aim to set industry benchmarks in product quality and competitiveness towards expanding our regional footprint,” he noted.

Similar to Daibochi, MPP manufactures downstream flexible packaging comprising roll-form and pre-made pouches with laminated structures mainly for F&B applications, including confectionary, snacks, noodles and powdered beverages.

MPP posted a net profit of RM6.9 million and revenue of RM131.7 million for the year ended Dec 31, 2018 (FY18). About 86.5% of MPP’s FY18 revenue was derived from Malaysia-based customers, with the balance 13.5% from export markets such as the Philippines, China, Mauritius and Kuwait.

The RM125 million purchase consideration, funded through internally-generated funds and bank borrowings, represents an enterprise value over earnings before interest, tax, depreciation and amortisation of 8.07 times based on MPP’s audited financial results for FY17.

The acquisition of MPP is expected to be completed in the third quarter of 2019, and begin contributing to Daibochi’s financial performance from FY20 onwards.