YOMA Strategic Holdings is making a first foray into whisky distillation as the real estate developer aims to be Myanmar's version of Jardine Matheson.
Yoma will pay US$3.3 million upfront and a subsequent consideration of up to US$7.8 million - or US$11.1 million in total - to get a 30 per cent stake in Asia Beverages Co (ABC), which makes the High Class brand of blended whisky. The amount of the second instalment is dependent on ABC hitting certain performance milestones in 2014 and 2015.
PMM Partners, a joint venture between Yoma chairman Serge Pun and Simon Murray & Co, will take an additional 20 per cent stake in ABC. The total consideration for PMM's stake is up to US$7.4 million, priced at the same rate as Yoma's portion.
This will be Yoma's first investment in the fast-moving consumer goods (FMCG) sector.
High Class Whisky has a growing market share, standing now at 14 per cent. ABC also plans to launch RedSquare, a line of pre-mixed alcoholic beverages, in March.
Yoma representatives also told BT that while ABC is not in the beer business at the moment, it is "in active discussion with leading international companies in the FMCG sector including the beer market to expand its Myanmar presence".
The ABC investment reflects Yoma's strong diversification push beyond its real estate base. The company currently runs a balloon tourism outfit in Bagan, and has joint ventures to pursue car repair and distribution and building telecommunications equipment.
Non-property activities accounted for only about 10 per cent of the business, Yoma chief executive Andrew Rickards had told BT earlier.
"Mr Pun has been successful outside property in the past, and my background and the background of many of our people, we didn't start in property," Mr Rickards said.
"We want to be like Jardine Matheson, but in a single country."
OCBC analyst Eli Lee said in a note to clients that the deal will expand Yoma's presence in a new sector and give Yoma access to ABC's extensive distribution network.
"We see this acquisition to be an attractive one," Mr Lee wrote.
Mr Lee has a "buy" rating on the stock with a fair value estimate of 97 cents.
Yoma shares closed yesterday at 74.5 cents, lower by 0.7 per cent or half a cent.