RE&S shares soar 32% day after announcing privatisation offer from unit of Southern Capital Group
Shareholders are offered either a cash payout of S$0.36 a share, or a combination of S$0.33 a share in cash and 0.083143 new share in special purpose vehicle
SHARES of RE&S Holdings soared on Monday (May 20) after the food and beverage operator on Sunday said that it has received a privatisation proposal from Euphoria Investments, a special purpose vehicle managed by Southern Capital Group (SCG).
Shareholders who accept the offer can either opt for a cash payout of S$0.36 a share, or a combination of S$0.33 a share in cash and 0.083143 new share in the special purpose vehicle. The offer is made by way of scheme of arrangement.
When market reopened on Monday, RE&S shares shot up to trade near the offer price within a narrow band of S$0.34-S$0.35. They eventually settled at S$0.35 at the market close for a S$0.085 or 32.1 per cent gain on turnover of 589,000 units. This also the highest close since the company’s initial public offering at S$0.22 a share in November 2017.
RE&S operates Japanese food and beverage outlets in Singapore and Malaysia, including popular brands such as Ichiban Boshi, Kuriya Japanese Market and Gokoku.
In its statement on Sunday, RE&S said the offer represented a 56.5 per cent premium to the last traded price of S$0.23 or 50 per cent to the three-month volume weighted average price up to the last traded day.
It also represents a 45.2 per cent premium to the six-month volume weighted average price up to May 13, and is priced at more than two times the company’s audited net asset value per share as at Jun 30, 2023.
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DBS is the sole financial advisor to Southern Capital Group for this deal.
In its statement, RE&S said Euphoria Investments plans to leverage Southern Capital Group’s expertise, resources and network to accelerate the F&B company’s growth trajectory, capitalise on emerging opportunities and strengthen its market position.
“The offeror believes that the privatisation of the company will provide the business with the necessary flexibility to focus on long-term execution whilst helping it save costs and resources associated with maintaining its listed status,” the company added.
It noted that the trading volume of the stock had been low for at least the past 12 months.
“The scheme therefore provides shareholders who find it difficult to exit the company as a result of the low trading volume of the shares with an opportunity to liquidate and realise their investment in the shares at a premium to the prevailing market prices which would otherwise not be available given the low trading liquidity,” RE&S said.
Major shareholders – comprising Hiroshi Tatara, Yek Hong Liat John, Foo Kah Lee and Lim Shyang Zheng – have given an irrevocable undertaking to the offeror to vote in favour of the scheme at a forthcoming meeting. Their combined holdings represent about 84.1 per cent of all outstanding shares.
Foo, who is also executive director and CEO of RE&S, said: “This is another significant milestone in the company’s development and growth trajectory, and our employees and staff will be further motivated by SCG’s compelling interest and participation.”
Euphoria Investments is an indirect wholly owned subsidiary of a fund that is advised and managed by SCG, a leading Singapore-headquartered private equity firm that focuses on investments into high growth middle market businesses across South-east Asia.
This acquisition dovetails with this focus and presents Euphoria Investments an opportunity to invest in a multi-concept owner and operator in the Japanese cuisine F&B sector, with a strong foothold in Singapore and a direct presence in Malaysia.
Said SCG CEO Kenneth Tan: “We look forward to the opportunity of partnering with the company for its next phase of growth and are pleased to put forward this privatisation offer to shareholders that will allow an exit of their investment at an attractive price.”
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