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Super Group going Dutch in S$1.45b privatisation offer

S$1.30-a-share offer is one-third above pre-announcement price; 3-in-1 coffee maker may be latest big consumer name to exit S'pore stock market
Friday, November 4, 2016 - 05:50

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“We wanted a partnership that could build on the legacy which we have built, sachet by sachet ... our financial adviser ... then put together the transformative combination with JDE on terms that we could not turn down.” - Super’s executive director Darren Teo. Picture shows one of the company’s plants.

Singapore

THREE-in-one coffee-mix maker Super Group looks set to be the next prominent consumer brand leaving the Singapore stock market.

Dutch tea and coffee group Jacobs Douwe Egberts (JDE) on Thursday launched a bid for Super at a double-digit premium to market, raising the prospects for a successful privatisation, with analysts mostly hailing the offer attractive.

JDE is offering S$1.30 per Super share in cash to take the company private, representing a 34 per cent premium to the stock's 97 Singapore cent close before the announcement was made. The offer values Super at S$1.45 billion, which would make it the largest takeover offer for a Singapore-listed stock announced so far this year. Super stock headed out at S$1.26 on Thursday after the announcement.

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JDE has already secured acceptances from Super's major shareholders, who hold a combined 60 per cent stake. Those shareholders comprise the families of founders David Teo and Ronald Te; tycoon Sam Goi and his Tee Yih Jia Food Manufacturing company; and Yeo Hiap Seng unit YHS Investment.

The offer has therefore already cleared its minimum-acceptance hurdle, leaving regulatory clearance in Singapore and the Philippines as the only major condition outstanding.

The deal took some by surprise, although the stock had prompted a trading query from the Singapore Exchange on Oct 5, when its price jumped 12.5 per cent over a single session. Super said then that it undertakes strategic reviews from time to time and was in preliminary discussions.

DBS analysts Alfied Yeo and Andy Sim wrote in a report on Thursday: "This event is a surprise to us, given our view that the founding shareholders have not shown prior indications of selling out. In fact, they had been on the look-out for acquisition targets to leverage its balance sheet, with a view to growing its business further."

The offer is widely expected to succeed, with analysts generally giving thumbs up for the pricing. DBS described the valuation, at 30 times earnings, as "rich", given the currently challenging operating environment.

CIMB analyst Jonathan Seow advised minority shareholders to accept the offer, noting that the price was a 60 to 63 per cent premium to the stock's volume-weighted average trading price over the past one to three months.

Super executive director Darren Teo, whose father and Super chairman David Teo started the company 29 years ago, told The Business Times that the company had engaged financial adviser Evercore Asia to assess "how to take Super to the next level".

"Although we received multiple approaches, we thought that the partnership with JDE, the leading pure-play consumer packaged goods coffee company in the world, would be highly complementary to the already well-loved brands that we have," he said.

"We wanted a partnership that could build on the legacy which we have built, sachet by sachet.

"Evercore, our exclusive financial adviser and architect of the transaction, then put together the transformative combination with JDE on terms that we could not turn down."

The Super privatisation, if it occurs, will be the latest in a string of take-outs over the past year among prominent consumer brands listed on the Singapore Exchange.

Already, massage chair maker OSIM International, traditional Chinese medicine retailer Eu Yan Sang and restaurant operator Select Group have been the target of privatisation bids.

 

Consumer take-outs

 

Mr Seow said that conditions were favourable for take-outs in the consumer sector.

"Consumer discretionary spending has slowed down, which means valuations are cheaper," he said. "If you are the founder or a bigger company looking around, there are opportunities."

In Super's case, JDE's aggressive offer appears to reflect the fact that the Dutch group does not have a big presence in Asia, Mr Seow said. Super, with its sales reach in 65 countries and manufacturing plants in 15 Asian countries, could fill that vacuum.

Evercore chief executive Keith Magnus said that overall merger and acquisition (M&A) activity has been robust this year.

"Evercore Singapore is currently executing a double-digit number of mandates, which comprise both outbound M&A situations as well as inbound," he said. "We are certainly seeing a huge amount of M&A activity so far this year and this is the second deal of over S$1 billion we are announcing in a week."

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