PETALING JAYA: Leong Hup International Bhd is proposing to acquire The Bakers Cottage (TBC) and its retail businesses, via three separate acquisitions, in an effort to integrate its poultry business and improve future profitability.
The first proposed transaction (Proposal 1) will involve a share acquisition agreement between Leong Hup (Malaysia) Sdn Bhd and Emerging Glory Sdn Bhd for the purchase of a 100% stake in TBC for RM17.94 million.
The second proposed transaction (Proposal 2) entails a business acquisition agreement between Leong Hup Agrobusiness Sdn Bhd (LHASB) and Astaka Shopping Centre (Muar) Sdn Bhd for the acquisition of the TBC brand bakery business owned and operated by Astaka in Melaka, Seremban and Johor for a total of RM1.53 million.
The third proposal (Proposal 3) is another business acquisition agreement between LHASB and Poly-Yarn Industries Sdn Bhd for the acquisition of the TBC retail business owned and operated by Poly-Yarn in Petaling Jaya and Setia Alam for a total of RM862,126.
For Proposal 1, the sale of shares took place on June 1. For Proposals 2 and 3, LHASB will acquire all of the inventories, fixed assets and TBC licence rights and tenancies from Astaka and Poly-Yarn. LHASB will also assume the employees of Astaka and Poly-Yarn in the TBC retail business with effect from June 1.
“The proposals will allow Leong Hup International to own the TBC brand and integrate vertically downward to capture incremental value added from its poultry related product sales and provide margin stability in times of live broilers supply-demand imbalance,” the group said in a Bursa filing.
The proposals will be funded through internally generated funds and/or bank borrowings, and are expected to be completed by the third quarter of 2020.
