KUALA LUMPUR (July 15): Life Water Bhd (KL:LWSABAH) plans to acquire Hung Tai Group for RM46.8 million in a move by the Sabah-based bottled water company to diversify into food manufacturing.
If it goes through, the deal for a 90% stake in Hung Tai — which makes sauces, condiments, noodles and red bean paste, as well as distributes food products across Sabah, Sarawak and Brunei — will strengthen its presence in the industry, said Life Water managing director Liaw Hen Kong.
"With both groups operating in the fast-moving consumer goods sector and sharing complementary distribution channels, logistics infrastructure and customer networks across East Malaysia,” he continued, “the enlarged group leverages these combined strengths to enhance operational integration, expand market reach and unlock cross-selling opportunities across a broader consumer product portfolio.”
Founded in 1995, the Hung Tai Group comprises Hung On Thong Mini Supermarket Sdn Bhd, Hung Tai Enterprise (Sabah) Sdn Bhd and Kilang Mee Ban Soon Sdn Bhd.
A share sale agreement has been signed with Hung Tai owners Lai Chaw Shiong, Lai Chaw Hung, Lai Chaw Kong, Lai Chaw Chau, Mejon Majambar as well as Lai Jia Hui, who is retaining 10% stake, for the acquisition expected to be completed by October 2026, Wednesday's bourse filing showed.
Under the terms of the deal, the sellers have guaranteed annual profit after tax of at least RM7.5 million for financial years ending June 30, 2027 and June 30, 2028. Life Water will retain RM5 million of the purchase price as security against any profit shortfall or liabilities arising prior to completion.
The acquisition will be funded equally through internally generated funds and bank borrowings. Life Water was in net cash position as at end-March with RM99.9 million in cash and short-term funds.
The deal values Hung Tai at about seven times its earnings for the year ended December 31, 2025.
Shares of Life Water closed up seven sen or 4.7% to RM1.55 on Wednesday, giving it a market capitalisation of RM733 million ahead of the announcement.