KUALA LUMPUR: Johor Corp (JCorp) and private equity firm CVC Capital Partners Asia III Ltd have made a joint takeover offer for QSR Brands Bhd at RM6.80 per share and its subsidiary KFC Holdings (M) Bhd (KFCH) at RM4.
A special purpose vehicle called Massive Equity Sdn Bhd (MESB) will undertake the takeover to buy the assets and liabilities from the two subsidiaries of JCorp.
The assets and liabilities route will require the acquirers to secure the consent of at least 75% of the minority shareholders in order for the deals to materialise.
Currently, JCorp owns a 57.05% stake in Kulim (M) Bhd, which in turn holds 58.68% of QSR.
QSR is the major shareholder of KFCH with a 50.64% stake.
Upon completion of the takeover exercise, both QSR and KFCH will become empty shell companies, and the bulk of the sale proceeds will be distributed back to shareholders in the form of capital repayment and special dividend.
JCorp holds 51% equity interest in MESB, while CVC Capital owns the remaining 49%.
MESB is also offering RM3.79 for each outstanding warrant in QSR and RM1 for every KFCH warrant.
“The acquisitions will allow JCorp to flatten its vertical corporate structure and reduce its multiple listings, resulting in better governance and greater operational efficiency which will drive both growth and long-term value.” said the Johor state-owned investment arm.
“This will in turn facilitate fund raising and leveraging on operating assets as part of JCorp’s overall rationalisation programme, which will also address the debt issue at JCorp,” it said.
At RM6.80 per QSR share, the company is valued at some RM2.06 billion. The offer price is an 80 sen or 13% premium over the last transacted price of RM6 prior to the announcement.
The offer price of RM4 a share for KFCH values the fast food chain at RM3.17 billion. The price is 59 sen or 17% higher than the counter’s last closing price of RM3.41 on Tuesday.
According to JCorp, the offer prices for QSR and KFCH are deemed attractive. This is because the acquirers are paying a premium of 18% and 20% to QSR and KFCH’s three-month weighted average share prices of RM5.68 and RM3.38 respectively.
The success of the takeover offers hinges on MESB signing definitive agreements with QSR and KFCH. Both offers will expire at 5pm on Dec 21. CIMB Investment Bank is advising MESB on the deals.
JCorp, in a statement yesterday, said its takeover offers for both companies indicated its confidence in the long-term value of the businesses.
QSR via KFCH owns and operates some 620 KFC restaurants in Malaysia, Singapore, Brunei, Cambodia and India, according to QSR’s website.
KFCH also manages some 29 RasaMas restaurants in Malaysia and Brunei besides 55 Kedai Ayamas in Malaysia.
In terms of financials, QSR’s net profit fell marginally to RM74.41 million for 9MFY11 ended Sept 30, from RM74.92 million a year earlier, despite revenue rising 10% to RM2.43 billion from RM2.2 billion.
KFCH’s net profit dipped 2% to RM106 million from RM108.17 million while revenue gained 10% to RM2.03 billion from RM1.84 billion.
As at Dec 31, 2010, JCorp’s debts came to RM3.35 billion, its latest annual report shows.
This compares with RM3.8 billion a year earlier.
JCorp has taken the initiative to repay and re-finance the debt obligations which mature in 2012. Under its Corporate Restructuring Master Plan, which was unveiled in 2002, the state investment arm had restructured its debt and raised funds from the divestment of non-strategic assets for loan repayment by July 31, 2012.
A JCorp official who requested anonymity told the briefing yesterday that MESB would fund the acquisitions via equity financing from its owners JCorp and CVC apart from resorting to bank loans to finance the acquisitions of QSR and KFCH.
CVC Capital is not new to the local corporate scene. The private equity firm had partnered Multi-Purpose Holdings Bhd to privatise Magnum Corp Bhd three years ago. It has also bought over Genting Bhd’s paper and packaging business for RM745 million.
In fact, this is the second attempt CVC made to take over the fast food chain, which is perceived to be a good cash generating asset.
To recap, in November last year, Tan Sri Halim Saad, the former executive chairman of Renong Bhd, and Datuk Che Mokhtar Che Ali via their private investment vehicle Idaman Saga Sdn Bhd offered to acquire the entire business and undertakings of QSR at RM5.60 a share.
The offer price was later revised upwards to RM6.70 after Idaman Saga said it planned to undertake the exercise in collaboration with KUB Malaysia Bhd and CVC.
QSR subsequently rejected the proposed takeover offer. QSR also declined offers from other private equity entities including Carlyle Group.
This article appeared in The Edge Financial Daily, December 15, 2011.
A special purpose vehicle called Massive Equity Sdn Bhd (MESB) will undertake the takeover to buy the assets and liabilities from the two subsidiaries of JCorp.
The assets and liabilities route will require the acquirers to secure the consent of at least 75% of the minority shareholders in order for the deals to materialise.
Currently, JCorp owns a 57.05% stake in Kulim (M) Bhd, which in turn holds 58.68% of QSR.
QSR is the major shareholder of KFCH with a 50.64% stake.
Upon completion of the takeover exercise, both QSR and KFCH will become empty shell companies, and the bulk of the sale proceeds will be distributed back to shareholders in the form of capital repayment and special dividend.
The offer price of RM4 for KFC Holdings(M) Bhd values the fast food chain at
RM3.17 billion
RM3.17 billion
JCorp holds 51% equity interest in MESB, while CVC Capital owns the remaining 49%.
MESB is also offering RM3.79 for each outstanding warrant in QSR and RM1 for every KFCH warrant.
“The acquisitions will allow JCorp to flatten its vertical corporate structure and reduce its multiple listings, resulting in better governance and greater operational efficiency which will drive both growth and long-term value.” said the Johor state-owned investment arm.
“This will in turn facilitate fund raising and leveraging on operating assets as part of JCorp’s overall rationalisation programme, which will also address the debt issue at JCorp,” it said.
At RM6.80 per QSR share, the company is valued at some RM2.06 billion. The offer price is an 80 sen or 13% premium over the last transacted price of RM6 prior to the announcement.
The offer price of RM4 a share for KFCH values the fast food chain at RM3.17 billion. The price is 59 sen or 17% higher than the counter’s last closing price of RM3.41 on Tuesday.
According to JCorp, the offer prices for QSR and KFCH are deemed attractive. This is because the acquirers are paying a premium of 18% and 20% to QSR and KFCH’s three-month weighted average share prices of RM5.68 and RM3.38 respectively.
The success of the takeover offers hinges on MESB signing definitive agreements with QSR and KFCH. Both offers will expire at 5pm on Dec 21. CIMB Investment Bank is advising MESB on the deals.
JCorp, in a statement yesterday, said its takeover offers for both companies indicated its confidence in the long-term value of the businesses.
QSR via KFCH owns and operates some 620 KFC restaurants in Malaysia, Singapore, Brunei, Cambodia and India, according to QSR’s website.
KFCH also manages some 29 RasaMas restaurants in Malaysia and Brunei besides 55 Kedai Ayamas in Malaysia.
In terms of financials, QSR’s net profit fell marginally to RM74.41 million for 9MFY11 ended Sept 30, from RM74.92 million a year earlier, despite revenue rising 10% to RM2.43 billion from RM2.2 billion.
KFCH’s net profit dipped 2% to RM106 million from RM108.17 million while revenue gained 10% to RM2.03 billion from RM1.84 billion.
As at Dec 31, 2010, JCorp’s debts came to RM3.35 billion, its latest annual report shows.
This compares with RM3.8 billion a year earlier.
JCorp has taken the initiative to repay and re-finance the debt obligations which mature in 2012. Under its Corporate Restructuring Master Plan, which was unveiled in 2002, the state investment arm had restructured its debt and raised funds from the divestment of non-strategic assets for loan repayment by July 31, 2012.
A JCorp official who requested anonymity told the briefing yesterday that MESB would fund the acquisitions via equity financing from its owners JCorp and CVC apart from resorting to bank loans to finance the acquisitions of QSR and KFCH.
CVC Capital is not new to the local corporate scene. The private equity firm had partnered Multi-Purpose Holdings Bhd to privatise Magnum Corp Bhd three years ago. It has also bought over Genting Bhd’s paper and packaging business for RM745 million.
In fact, this is the second attempt CVC made to take over the fast food chain, which is perceived to be a good cash generating asset.
To recap, in November last year, Tan Sri Halim Saad, the former executive chairman of Renong Bhd, and Datuk Che Mokhtar Che Ali via their private investment vehicle Idaman Saga Sdn Bhd offered to acquire the entire business and undertakings of QSR at RM5.60 a share.
The offer price was later revised upwards to RM6.70 after Idaman Saga said it planned to undertake the exercise in collaboration with KUB Malaysia Bhd and CVC.
QSR subsequently rejected the proposed takeover offer. QSR also declined offers from other private equity entities including Carlyle Group.
This article appeared in The Edge Financial Daily, December 15, 2011.
