KUALA LUMPUR (Aug 13): Berjaya Corp Bhd (BCorp) has aborted its proposed takeover of Singer (M) Sdn Bhd, from Berjaya Retail Sdn Bhd (BRetail) and its largest shareholder Tan Sri Vincent Tan, for RM536 million.
BCorp said it has entered into a termination agreement with BRetail and Tan to mutually terminate the memorandum of understanding signed in June in relation to the proposed acquisition of the 100% stake in the home electronic appliances distributor.
The termination is due to business challenges and uncertainty in the recovery of the economy due to the Covid-19 pandemic, BCorp said in a filing with Bursa Malaysia today.
"The termination will not have any material effect on the issued share capital, substantial shareholders' shareholdings, earnings, net assets and gearing of the BCorp group," it added.
The deal, announced on June 2, was deemed to be a related-party transaction given that Tan, who is BCorp controlling shareholder and founder, is also the main shareholder of Singer.
The Edge Malaysia, in an article in its June 8-14 issue, said the purchase was deemed expensive. At 19 times price-earnings ratio, BCorp could have acquired stakes in other retail companies that give better returns, said investors whom the weekly spoke to.
Under the proposal, BCorp was to issue 1.18 billion new shares for the net payment of RM388 million, after an offset of the inter-company debts of Singer Group (amounting to RM148 million) against the price tag of RM536 million.
In addition, Tan was to provide BCorp with a profit guarantee that Singer would achieve a net profit of RM20 million a year for the financial years ending Dec 31, 2020 and 2021.
BCorp shares finished 2.44% or half a sen higher at 21 sen today, valuing the group at RM1.1 billion. The counter saw 4.54 million shares done.