Neo Group to acquire 51% stake in snack maker

CATALIST-LISTED food caterer Neo Group is acquiring a 51 per cent stake in local snack manufacturer Royale International Food Industries (RIFI) for S$1.02 million in cash, it said in an exchange filing on Wednesday.

The proposed acquisition is being carried out via wholly-owned subsidiary Thong Siek Global, with the consideration financed by internal cash resources and/or bank borrowings.

Neo Group's chairman and chief executive officer Neo Kah Kiat said the move is a "strategic fit" for its food-manufacturing business, and the diversification into snack food products will broaden the group's revenue stream, with the added benefit of expanding into new overseas markets.

RIFI is principally engaged in the manufacture of snacks under its flagship brand, Crusty's, with a selection of ready-to-eat products such as potato chips, fish skin and soy-based snacks. Neo Group said these snacks are available locally in Singapore, and also exported and sold in overseas markets such as Australia, China, the US and Malaysia.

Mr Neo said: "In line with our growth strategies, we intend to actively expand our product offerings to cater to different market segments, to meet changing consumer demand and capture growth opportunities in snacks and ready-to-eat products.

"This earnings-accretive acquisition will also allow us to create new income streams, drive our export sales to new and existing markets worldwide, tapping both parties' well-established network across over 30 countries globally."

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Neo Group said the proposed acquisition is not expected to have any material impact on the group's consolidated net tangible assets or earnings per share for its current financial year ending March 31.

Shares of Neo Group fell one per cent or 0.5 Singapore cent on Wednesday to close at 52.5 cents before the announcement.