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Japan retailer Nojima makes offer for Courts Asia at S$0.205 apiece

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A unit of Japanese electronics retailer Nojima Corp is making a conditional cash offer for Courts Asia at S$0.205 per share as it seeks to gain a strong foothold in South-east Asia.

A UNIT of Japanese electronics retailer Nojima Corp is making a conditional cash offer for Courts Asia at S$0.205 per share as it seeks to gain a strong foothold in South-east Asia, the Singapore company announced before market open on Friday.

The offer price represents a premium of about 35 per cent above Courts' closing price on Jan 16, and a premium of about 36.1 per cent, 34.3 per cent and 23.3 per cent above the volume-weighted average price (VWAP) per share for the one-month, three-month and six-month period respectively. Courts shares closed at 15.2 Singapore cents on Thursday.

Trading in Courts shares were halted before the market opened on Friday, but its stock price has been on a tear since the trading halt lifted just after the midday market break. As at 2.36pm, its shares were trading 4.8 Singapore cents or 31.6 per cent higher at 20 Singapore cents, 2.5 per cent under Nojima's offer price per share. 

The counter, which averaged a turnover of 255,000 shares over the last 15 trading days, was also seeing comparatively heavy trading, with 1.59 million shares changing hands.

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The offer is conditional upon Nojima Asia Pacific having received by the close of the offer sufficient valid acceptances that together with the shares owned by Nojima, and any parties acting in concert with it, results in more than 50 per cent of the shares in issue and outstanding.

Nojima has received an undertaking from Courts' majority shareholder Singapore Retail Group (SRG), under which SRG has agreed to irrevocably tender all its 382 million shares translating to a 73.8 per cent stake in the company. Once SRG accepts, the offer will turn unconditional.

Tokyo Stock Exchange-listed Nojima is an electrical appliance retail chain dealing mainly with the sale of consumer digital appliances, and has a headcount of over 8,000 employees worldwide. It has a market capitalisation of S$1.4 billion and earned revenues of S$6.1 billion for the financial year ended March 2018.

After the offer is completed, Nojima may undertake a "strategic and operational review of Courts, with a view to realising synergies, economies of scale, cost efficiencies and growth potential". It will also consider delisting Courts from the Singapore Exchange if it gets enough acceptances to delist.

Courts Asia - which is the holding company for Courts (Singapore) Pte Ltd, Courts (Malaysia) Sdn Bhd and PT Courts Retail Indonesia - has been listed on Singapore's mainboard since October 2012. With its roots as a furniture retailer from the UK, Courts opened its first store in Singapore in 1974, mainly selling furniture. Today, it operates around 80 stores across its three markets and has expanded its range to include electrical, IT and furniture products.

Explaining the rationale behind the acquisition, Nojima said that it has been mulling over entering the consumer appliance retail market in South-east Asia, and that synergies can be created between the two retail groups, including cross-selling to an enlarged customer base, economies of scale, improvement of productivity and cost efficiencies, as well as knowledge sharing.

It also highlighted that shareholders can use the offer as an exit opportunity given Courts' low trading liquidity. "The closing price of the shares have not been at or above the offer price since July 27, 2018," it added.

The offer document will be dispatched to shareholders in 14 to 21 days from the date of the offer announcement.

The board will, in due course, appoint an independent financial adviser (IFA). The advice of the IFA and the recommendation of the company's independent directors will be issued to shareholders via a circular within two weeks from the offer document. 

Courts posted a net loss of S$3.1 million for its fiscal second quarter, sinking into the red from a net profit of S$1.5 million for the same period a year earlier, weighed down by lower gross profit margins and revenue.

Revenue for the three months ended Sept 30, 2018, fell 6.4 per cent to S$165.1 million as its Singapore operations reported lower revenue owing to lower earned service charge income and corporate sales. Second-quarter loss per share was 0.59 Singapore cent versus earnings per share of 0.29 Singapore cent a year ago.