KUALA LUMPUR (Dec 18): Keynote Capital Sdn Bhd, controlling shareholder of Apollo Food Holdings Bhd, is confirmed to be exiting the group after Scoop Capital Sdn Bhd, the franchisee of Baskin-Robbins, proposed to acquire Keynote's entire 51.31% stake in the confectionery maker for RM238.08 million in cash.
Scoop Capital is purchasing the 41.05 million Apollo shares from Keynote — the investment vehicle of Singaporeans Liang Chiang Heng and his younger brother Liang Kim Poh — at RM5.80 per share, a 7.4% premium to the last closing price of RM5.40.
According to a filing to Bursa on Monday, while Scoop Capital is obliged to extend an unconditional mandatory takeover offer to acquire all the remaining 48.49% stake in the group at RM5.80 per share, it intends to maintain the listing status of Apollo on the Main Market of Bursa Malaysia.
“Accordingly, in the event that Apollo does not comply with the public spread requirement (at least 25% of shares held by public shareholders) as a result of the offer, the offeror (Scoop Capital) will, together with Apollo, explore other options of proposals within three months from the closing date or such extended timeframe as allowed by the relevant authorities, to enable compliance by Apollo with the public spread requirement,” the filing read.
“As at the date of this notice, no arrangements on the above have been made,” it added.
Apollo makes compound chocolates, chocolate confectionery products and layer cakes under its own “Apollo” brand for both the local and overseas markets.
Based on a trailing earnings per share (EPS) of 44.02 sen, Scoop Capital’s RM5.80 per share consideration for Apollo’s shares values the company at a price-to-earnings ratio (PER) of 13.18 times.
Kawan Food Bhd, which makes frozen food — ranging from paratha, spring roll, pastry, chapati, finger food, bakery and desserts — under the “Kawan”, “KG Pastry”, “Veat” and “Aman” brands, is trading at a PER of 22.34 times — based on Monday’s close of RM1.85 and a trailing EPS of 8.28 sen.
Meanwhile, Hup Seng Industries Bhd, which makes biscuits under the “Cap Ping Pong” and “Hup Seng Cream Crackers”, is trading at a PER of 14.32 times — based on a closing price of 78.5 sen and a trailing EPS of 5.48 sen.
Apollo said a share sale agreement has been entered between Scoop Capital and Keynote for the deal, with the share transfer to take effect via a direct transaction on Dec 19.
The announcement confirms a report in The Edge last Friday (Dec 15) that Chiang Heng and Kim Poh wanted to dispose of their 51.31% stake in Apollo under Keynote.
Scoop Capital — 90%-owned by Datuk Cheah See Yeong, while the remaining 10% is held by his spouse Datin Soon Gock Lan @ Soon Geok Lin — owns a 100% stake in Golden Scoop Sdn Bhd, which is the master franchisee for ice cream brand Baskin-Robbins in Malaysia and Singapore.
At Apollo's request, the counter, which climbed 49.2% year to date, was suspended from trading on Monday pending the release of the acquisition news. It will resume trading on Tuesday at 9am.
Keynote's Chiang Heng, 73, currently serves as Apollo’s executive chairman, while Kim Poh, 62, is the group's managing director. It was reported that with the pair of brothers advancing in age, coupled with the lack of a clear succession plan, rumours were abound of their interest in exiting the group.
Chiang Heng has been with Apollo since 1979 and was appointed as MD in 1996, followed by ascending to his current role in 1998. Kim Poh joined the group’s board in 1998, before assuming his MD role in 2017.
Apollo, a strong household brand in Malaysia, has been listed on the local bourse since 2000. The group has been consistently profitable and a regular dividend payer over the past two decades.
Most recently, the group’s net profit rose 5.15% to RM9.95 million for the second quarter ended Oct 31, 2023 (2QFY2024) from RM9.46 million a year earlier, underpinned by a higher gross profit margin.
Quarterly revenue was down 6.13% to RM65.99 million from RM70.3 million previously, mainly on the back of lower export sales.
For the six-month period ended October 2023 (1HFY2024), its net profit increased 25.37% to RM17.59 million from RM14.03 million previously. Half-year topline declined a marginal 1.15% to RM124.32 million from RM125.76 million previously.