This article first appeared in The Edge Financial Daily on December 12, 2017
KUALA LUMPUR: OldTown Bhd has received a pre-conditional voluntary general offer for its shares at RM3.18 apiece from global coffee maker Jacobs Douwe Egberts BV (JDE). The offer was made through JDE’s indirect wholly-owned unit, Jacobs Douwe Egberts Holdings Asia NL BV (JDE Asia).
OldTown said its shareholders, holding a total stake of 51.45% in the group, have provided irrevocably undertakings to accept the cash offer. These shareholders are Old Town International Sdn Bhd (42.58%), OldTown’s management director Lee Siew Heng (1.34%) and Mawer Investment Management Ltd (7.52%).
In a filing with Bursa Malaysia yesterday, OldTown said the offer price represents a 10.42% premium over its last transacted price of RM2.88, and values the coffee manufacturer and restaurant chain operator at RM1.47 billion.
At RM2.88, OldTown has a market capitalisation of RM1.33 billion.
The Netherlands-based JDE in June acquired Super Group Ltd, a pan-Asian integrated instant food and beverage manufacturer founded by Singapore businessman Teo Kee Bock, for S$1.45 billion.
OldTown said JDE Asia, which currently does not own any shares in OldTown, will only proceed with its offer if all the pre-conditions are satisfied by Aug 11, 2018. The fulfilment, it added, does not amount to a firm intention for JDE Asia to make the offer.
The pre-conditions include JDE Asia’s filing being approved by the Competition Commission of Singapore to make the offer.
If the offer materialises, OldTown said JDE Asia does not intend to maintain the group’s listing status for greater control and management flexibility in the implementation of any strategic initiatives and operational changes.
OldTown said the offer represents an opportunity for shareholders to realise their investment in the group at a premium.
“The cash consideration under the offer presents shareholders with a clean cash exit opportunity to realise their entire investment in OldTown shares at a premium over the prevailing trading prices of the OldTown shares without incurring brokerage and other trading costs,” the group said.
In a separate statement, Lee said he looks forward to working with JDE to expand OldTown further.
“We are deeply honoured that JDE recognises the powerful brand and platform that we have tirelessly built over the past 18 years. We strongly believe JDE is the ideal partner as we continue to serve best-in-class products to our customers. We look forward to drawing on JDE’s deep global expertise and building a highly successful partnership with them,” he said.
JDE chief financial officer Fabien Simon said the company sees huge potential in OldTown.
“The OldTown team is focused on delivering premium, high-quality products to consumers and we see huge potential in the business. We are excited to work with the OldTown team to rapidly grow the business as part of the broader JDE platform,” he said.
CIMB Investment Bank Bhd is the principal adviser for the general offer on behalf of JDE Asia, while Evercore Inc is the international financial adviser to OldTown.
Evercore’s Asia and global partner chairman Keith Magnus said given the opportunities and challenges OldTown faces, the proposed offer is a unique opportunity for shareholders of OldTown to realise their investment for cash, at a significant premium to the market traded price.
“Notably, the founding shareholders have agreed to JDE’s proposed offer, which unlocks substantial value for the company’s shareholders,” Magnus said.
OldTown had 189 outlets in Malaysia and nine in Singapore as at Sept 30. Malaysia accounted for 59% of the group’s revenue for the financial year ended March 31, 2017.
OldTown shares last traded above RM3.18 on May 23, when the counter went up to RM3.24, a day after the stock ascended to an all-time high of RM3.35.
Year to date, OldTown’s share price has gained 57.38% from RM1.83 on Dec 30 last year.