Oldtown to buy remaining stake in China-based coffee distributor

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KUALA LUMPUR (July 15): Food and beverage company Oldtown Bhd has entered into a conditional share sale agreement (SSA) to buy the remaining 30% stake in China-based Advance City Ltd (ACL) for RM15.52 million.

Coffee product distributor ACL is already a 70%-owned subsidiary of Oldtown. Upon completion of the acquisition of the remaining 30%, ACL will become a wholly-owned subsidiary of Oldtown, according to Oldtown's filing with Bursa Malaysia today.

Oldtown said it entered into the SSA with Chan Koon Hung, Law Cho Hong and Lee Siu Chung to acquire the 30% ACL stake from them. According to Oldtown, the purchase will be financed via the issuance of 9.64 million new shares in Oldtown at RM1.61 each.

“The proposed acquisition will enable Oldtown to have complete control of ACL group’s operations (including future marketing and distribution plans) as well as its future strategic directions for the Hong Kong and Greater China region. This is in line with Oldtown and its subsidiaries' strategy to grow its sales in China said the group.

"The proposed acquisition also presents an opportunity for the Oldtown group to consolidate ACL group’s earnings in full as its wholly-owned subsidiary company. This, in turn, is expected to improve the earnings of the Oldtown group going forward," Oldtown said.

Following the new share issuance, Oldtown said the company would see its issued and paid-up share capital increase to 463.24 million shares from the current 453.6 million shares.

Oldtown expects to complete the ACL stake acquisition by the third quarter of this year.

At 5pm today, Oldtown shares rose two sen or 1% to close at RM1.65, bringing its market capitalisation to RM729.47 million.

The stock saw 33,700 shares done.

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