Fraser and Neave Seeks Growth in Malaysia And Beyond

Food and beverage (F&B) giant, Fraser and Neave (SGX: F99), made public recently that it is acquiring a 70% interest in Yoke Food Industries Sdn Bhd (YFI) for RM54.6 million or S$21.0 million.

YFI is a company based in Malaysia and it manufactures, markets and distributes canned beverages under brands such as Day Day, SoSoy and Juice Secret in the country. It also exports to Singapore, Indonesia and Indochina. F&N, on the other hand, owns a portfolio of reputable brands including F&N, 100PLUS and F&N SEASONS. It also runs Times Publishing, Singapore’s largest publishing and printing company

F&N said that the transaction will be funded from internal sources. As of the end of last year, F&N had total bank borrowings of S$1.4 billion while having S$748 million in cash and bank deposits.

The acquisition will help F&N secure YFI’s production capacity in the fast-growing non-carbonated beverages segment and allow collaboration with YFI to distribute and market F&N’s brands in Southeast Asia going forward. These can help strengthen F&N’s position as a leading F&B player in the region.

Dato’ Ng Jui Sia, Chief Executive Officer of the Non-Alcoholic Beverages segment of F&N, said, “We are excited about this next phase of growth and look forward to forging even closer working ties with YFI, F&N’s business partner since 2003. Both companies will benefit through greater scale, reach and the broader portfolio of brands.”

A few years back, F&N’s then-majority shareholders, Oversea-Chinese Banking Corporation (SGX: O39) and Great Eastern Holdings (SGX: G07), sold their stakes to Thai Beverage Public Company (SGX: Y92) and TCC Group, a private investment company linked to Thai Beverage. After acquiring control of F&N, Thai Beverage and TCC Group (both of which are controlled by Thai billionaire Charoen Sirivadhanabhakdi) then spun off the property business in F&N into Fraser Centrepoint (SGX: TQ5), leaving F&N with the F&B and publishing business.

F&N closed at S$3.03 on Tuesday, valuing the company at 7 times its historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.