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Super Group’s Owner Set to Take Malaysia-Listed OldTown Berhad Private

OldTown Berhad (5201.KL), operator of the OldTown White Coffee chain in Asia, is set to be privatised by Jacobs Douwe Egberts (JDE), which also bought out the Singapore-based instant coffee maker Super Group recently.

JDE is offering RM3.18 per share for OldTown, which is a 10.42% premium over its trading price on 7 December, the last full trading day before the offer was announced. The pre-conditional cash offer, which is subject to approval from the relevant authorities, will cost JDE around RM1.47 billion (about S$487 million).

Under the terms of JDE’s proposal, its offer for OldTown will become conditional once it receives acceptances from shareholders that result in it controlling over 50% of OldTown’s outstanding shares. Shareholders of OldTown who control 51.45% of the company’s shares have already agreed to accept the offer.

JDE intends to delist and privatise OldTown to allow greater control and management flexibility in the implementation of any strategic initiatives. A privatisation will also remove “compliance costs associated with maintenance of its listed status.”

On 2 February 2018, shareholders of OldTown will still receive the 3.0 sen per share interim dividend that was declared last month. No adjustment will be made to the offer price for the dividend. However, if OldTown declares any other dividend from now till the closing date of the offer, JDE may reduce the offer price accordingly.

OldTown’s group managing director, Lee Siew Heng, commented on the privatisation offer:

“We are deeply honoured that JDE recognises the powerful brand and platform that we have tirelessly built over the past 18 years. We strongly believe JDE is the ideal partner as we continue to serve best-in-class products to our customers. We look forward to drawing on JDE’s deep global expertise and building a highly successful partnership with them.”

The chief financial offer of JDE, Fabien Simon, said that his company sees vast potential in OldTown’s business and that JDE is “excited to work with the OldTown team to rapidly grow the business as part of the broader JDE platform.”

For its financial year ended 31 March 2017, OldTown’s earnings per share was 13.46 sen. The offer thus values the company at 23.6 times its historical earnings. In comparison, Super Group was valued at 32.7 times its 2016 earnings at its take-over price of S$1.30.

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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.