KUALA LUMPUR (June 3): Fraser & Neave Holdings Bhd (F&N) on Friday (June 3) proposed to privatise its 27.66%-owned associate Cocoaland Holdings Bhd by buying the remaining Cocoaland shares at RM1.50 each in a move which will help F&N expand into other packaged-food segments and grow the buyer's overseas markets.
The deal shall be settled via a cash consideration of RM488.15 million based on 325.43 million Cocoaland shares that are not owned by F&N and represent 72.34% of the share capital of Cocoaland.
The proposed privatisation will be funded by bank borrowings, said F&N’s Bursa Malaysia filing.
The deal represents a price-to-book ratio of 2.77 times based on Cocoaland’s audited consolidated net assets attributable to equity holders of RM243.32 million or 54 sen per Cocoaland share as at Dec 31, 2021 (FY21).
It also represents an enterprise value to earnings before interest, taxation, depreciation and amortisation (EBITDA) ratio of 18.47 times and 17.74 times based on Cocoaland’s audited consolidated adjusted EBITDA of RM32.8 million and RM33.53 million for the FY20 and FY21 respectively.
"On behalf of the board of directors of F&N, AmInvestment Bank Bhd wishes to announce that the company (F&N) has today (June 3) submitted a formal proposal (proposal letter) to the board of Cocoaland in respect of the proposed privatisation for its consideration.
"The board of Cocoaland is to revert to F&N no later than 5pm on June 17, 2022, with its decision whether to put forward the proposed privatisation to Cocoaland's shareholders for consideration," F&N said.
“It is the intention of F&N not to maintain the listing status of Cocoaland and accordingly, upon completion of the proposed privatisation and subject to Bursa Securities’ approval, Cocoaland shares will be delisted from the Main Market of Bursa Securities,” it added.
Currently, Cocoaland's largest shareholder is Leverage Success Sdn Bhd, holding a 40.65% stake or 182.87 million shares in the company. Leverage Success is jointly controlled by the Liew and Lau family members, including Cocoaland executive directors Liew Fook Meng, Lau Kee Von and Lau Pak Lam, as well as key senior management members Liew Yoon Kee, Lew Foo Chay and Lau Kwai Choon
F&N said the proposed privatisation which is to be undertaken by way of members’ scheme of arrangement under Section 366 of the Companies Act 2016 between Cocoaland and all the shareholders of Cocoaland, other than F&N (scheme shareholders) involves the acquisition by F&N and/or its nominees and transfer of all the Cocoaland shares owned by the scheme shareholders to F&N and/or its nominees.
F&N will acquire the scheme shares free from all moratorium, claims, charges, liens, pledge, encumbrances, options, rights of pre-emption, third party rights and equities from the date of sanction of the scheme by the High Court of Malaya and with all the rights, benefits and entitlements attached thereto.
Subject to the board of Cocoaland putting forward the proposed privatisation to the scheme shareholders and all the required approvals being obtained, the proposed privatisation is expected to be completed in the fourth quarter of 2022.
Shares of Cocoaland and F&N were suspended Friday (June 3) in respect of the privatisation deal. Cocoaland last traded at RM1.28 on June 2, with a market value of RM586 million, while F&N was settled at RM20, valuing it at RM7.34 billion.