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BreadTalk says latest JV with Perennial is not a diversification of its business
BREADTALK Group has clarified that its proposed investment alongside Perennial Real Estate in China does not represent a diversification of its business.
On Jan 3, BreadTalk said it would co-invest with a consortium of investors in a joint venture to develop healthcare integrated mixed-use developments connected to China's high-speed railway (HSR) stations.
The initial committed capital to the joint venture amounts to S$672.04 million and BreadTalk is investing S$33.6 million for a 5 per cent stake.
BreadTalk is making this investment with the intention to explore working with the healthcare players operating within these projects to meet their food and beverage needs, BreadTalk said on Friday in response to a query from the Singapore Exchange (SGX).
The SGX asked BreadTalk to clarify if its investment was considered to be a diversification of its business and if it should be subject to shareholders' approval.
BreadTalk's answer was no. It explained: "The group may set up food manufacturing operations within these developments to supply meals to the hospitals and eldercare facilities. Being a shareholder in the consortium of the proposed investment puts the group in a favourable position to have a first mover's advantage in working with the healthcare players that are planning to set up operations in the developments."
BreadTalk added that this business strategy is consistent throughout its several other investments with Perennial-led consortiums in the past.
These include a S$10 million investment in Katong Mall announced in November 2009, a S$18 million investment in CHIJMES announced in November 2011 and a S$34.65 million investment in Phase 1 and 2 of Beijing Tongzhou Integrated Development announced in April 2013.
BreadTalk shares fell two cents or 1.18 per cent to close at S$1.67 before its response to the SGX was posted after trading hours on Friday.