BreadTalk to buy food-court operator Food Junction for S$80m

Singapore

FOOD and beverage (F&B) player BreadTalk Group is looking to buy the entire stake in Food Junction Management (FJM), which operates food courts and F&B outlets in Singapore and Malaysia, for S$80 million.

BreadTalk announced on Monday morning that its wholly owned subsidiary, Topwin Investment Holding, had on Aug 30 entered into a sale and purchase agreement for the proposed acquisition of FJM from Food Junction Holdings.

The total consideration of S$80 million will be paid in cash and funded through BreadTalk's internal resources, including available cash on hand, and debt facilities.

For illustrative purposes only, assuming that a loan of S$49.6 million was drawn down on Jan 1, 2018 to fund the proposed acquisition, and that the transaction had been completed on Dec 31, 2018, BreadTalk's gearing for fiscal 2018 would have increased to 0.7 times, from 0.25 times before the acquisition.

The consideration may be subject to further adjustments to take into account the actual cash, debt and working capital of FJM as at completion of the acquisition. BreadTalk said the consideration was arrived at after arms' length negotiations, taking into account factors such as the quality of the assets being acquired, the strategic value of FJM's existing network of food courts and F&B outlets to BreadTalk, the financials of FJM for the year to date, the earnings quality and future potential of FJM.

FJM operates 12 food courts in Singapore and three in Malaysia, with another one scheduled to open next year at The Mall, Mid Valley Southkey, in Johor Bahru.

Meanwhile, BreadTalk operates food courts under the Food Republic and Food Opera brands in Singapore, Malaysia, China, Hong Kong, Taiwan, Cambodia and Thailand. As at June 30, the group runs 14 food courts in Singapore and two in Malaysia.

BreadTalk said the acquisition will allow it to obtain additional revenue streams and benefit from the synergies with its existing food court and F&B outlet business through the "streamlining of costs" and sharing of resources.

The seller, Food Junction Holdings, is 98.1 per cent owned by Auric Pacific Group Ltd (APGL), a Singapore-incorporated investment holding firm. APGL is 50.3 per cent owned by Lippo China Resources (LCR), which is 74.99 per cent held by Lippo Ltd.

The remaining 49.7 per cent of APGL is held by tycoon Stephen Riady - chairman and executive director of Lippo and LCR - and his son-in-law, Andy Adhiwana, through companies owned by each of them.

The proposed acquisition is conditional upon, among other things, approval by shareholders of BreadTalk, LCR and Lippo.

BreadTalk has almost 1,000 retail stores in 16 markets with its bakery, restaurant, food atrium and 4orth food concepts.

The proposed acquisition of FJM was announced two weeks after BreadTalk said its group chief executive officer (CEO) Henry Chu Heng Hwee had quit for personal and health reasons. After Mr Chu's last day on Dec 31, the company's founder and group executive chairman George Quek Meng Tong will take on the added role of group CEO.

BreadTalk shares closed at 66.5 Singapore cents on Monday, down 1.5 cent or 2.2 per cent.