KUALA LUMPUR (Jan 13): Guan Chong Bhd (KL:GCB), the fourth largest cocoa grinder in the world, has signed an agreement to acquire a 25% stake in Ivory Coast-based cocoa manufacturing outfit Transcao Côte d'Ivoire (Transcao CI) for €28.08 million (RM130.1 million) cash.
Guan Chong's wholly owned GCB Cocoa Singapore Pte Ltd has inked the share sale agreement with Ivorian government cocoa and coffee regulator Conseil Café-Cacao (CCC) for the 25% stake or five million shares in Transcao CI, according to Guan Chong's bourse filing on Monday.
The price tag comprises deal of €7.62 million for the shares, and an asset contribution of €20.46 million. The stake acquisition will be satisfied by internal funds, which will be partially reimbursed by banking facilities. The deal is expected to be completed by the second quarter of 2025.
Under the terms of the agreement, Guan Chong will own 25% of Transcao CI's shares, while CCC's stake will fall to 74.83% from 99.83%. Transcao Negoce will retain the remaining 0.17%.
The formal agreement follows Guan Chong's announcement in October last year that it was in exclusive talks for the 25% stake purchase after the parties entered into a memorandum of understanding. The acquisition is part of the group's growth strategy and in line with its desire to support the Ivory Coast state's vision in its development strategy for the industrialisation of the cocoa sector, Guan Chong said.
In an Oct 10 note, RHB Research said the proposed acquisition would give Guan Chong quick access to additional capacity at minimal capex, and help it secure bean supply to capture the current robust market, while CCC stands to benefit from production efficiency and Guan Chong’s established international sales channel. CCC oversees Ivory Coast’s annual cocoa bean production of about two million tonnes, which accounts for around 40% of the global supply.
Meanwhile, Guan Chong has postponed its plan to double the capacity of its cocoa bean processing plant in Ivory Coast to 120,000 tonnes annually, due to a global shortage of cocoa beans. The plant expansion remains part of the group's long-term plans, which the group would take into consideration when cocoa bean prices start to drop and demand for cocoa ingredients climbs again, according to Guan Chong managing director and chief executive officer Brandon Tay Hoe Lian in an interview with The Edge Malaysia in October last year,
Guan Chong's total annual grinding capacity now stands at 335,000 tonnes per year. Besides Ivory Coast (65,000 tonnes), it has production facilities in Johor (150,000 tonnes) and Indonesia (120,000 tonnes).
It also has a cocoa cake and butter grinding facility in the US, and presence in Europe through its ownership of Germany-based chocolate manufacturer SCHOKINAG Holdings GmbH. SCHOKINAG has an annual production capacity of 100,000 tonnes. Additionally, the group has an industrial chocolate subsidiary in the UK with an annual production capacity of 16,000 tonnes.
Shares in Guan Chong ended 11 sen or 2.67% lower at RM4.01 on Monday, valuing the group at RM4.71 billion.