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BreadTalk to buy over Food Junction for S$80 million

BreadTalk said that the consideration value was arrived at after arms’ length negotiations, on a willing-buyer, willing-seller basis.

Food and beverage company BreadTalk Group on Monday said it has entered a sale and purchase agreement to buy over the entire stake in Food Junction Management (FJM) from Food Junction Holdings for S$80 million.

BreadTalk will be making the purchase through its wholly-owned subsidiary Topwin Investment Holding. Once the proposed acquisition is completed, FJM will become a wholly-owned subsidiary of Topwin.

Food Junction Holdings is 98.1% owned by investment holding firm Auric Pacific Group.

Collectively, FJM and its wholly-owned subsidiaries Food Junction Singapore and T&W Food Junction run a network of 12 food courts locally and three in Malaysia. There are plans to open one more food court in 2020 at The Mall, Mid Valley Southkey. As of June 30, 2019, the entire outfit’s net asset value is at S$12.3 million.

‘The proposed acquisition will provide the group with access to FJM’s existing network of food courts and food and beverage (F&B) outlets, allowing the group to both obtain additional revenue streams and benefit from the synergies with the group’s existing food court and F&B outlet business through the streamlining of costs and sharing of resources,’ BreadTalk said.

The proposed acquisition is not considered to be a diversification of the group’s business, it added.

BreadTalk said that the consideration value of S$80 million was arrived at after arms’ length negotiations, on a willing-buyer, willing-seller basis. The amount will be paid in cash and will be funded through the group’s internal resources, including available cash on hand, and debt facilities.

BreadTalk currently operate food courts under the Food Republic and Food Opera brands in Singapore, Malaysia, China, Hong Kong, Taiwan, Cambodia and Thailand. As at June 30, 2019, the group runs 14 food courts in Singapore and two in Malaysia.

The group has close to 1,000 retail stores across 16 markets with its brand portfolio comprising of direct-owned brands such as its bakery BreadTalk and food and beverage outlets like Toast Box and Food Republic, as well as partner F&B brands such as Din Tai Fung and Song Fa Bak Kut Teh.

Shares of BreadTalk fell by 2.21% or S$0.015, to S$0.66 on Monday morning trade.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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