Thursday 28 Mar 2024
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KUALA LUMPUR (Jan 25): Shareholders voted against the proposed takeover of Burger King franchise by Brahim’s Holdings Bhd from Ekuiti Nasional Bhd (Ekuinas) at an extraordinary general meeting (EGM) this morning.

"At the end of the voting, 90% voted against the resolution," said Brahim's executive chairman Datuk Seri Ibrahim Ahmad Badawi, who chaired the meeting.

In November last year, the inflight catering company, via its subsidiary Brahim's Trading Sdn Bhd, together with private equity fund Quantum Angel, had intended to buyout the fast food franchise for RM95 million cash from Rancak Selera Sdn Bhd, a unit of Ekuinas.

Brahim’s (fundamental: 0.8; valuation: 1.8) needed the resolution passed as it had planned to invest RM95 million in the Malaysian and Singaporean franchise of Burger King.

During the EGM, shareholders were briefed that although the franchise was loss-making, the deal would provide long-term returns to the group.

The shareholders were also told that the group was confident that the franchise business would take at least two yeats minimum to be profitable but before that could happen, the Group will have to inject funds.

Rancak Selera is the holding company for Cosmo Restaurants Sdn Bhd and Burger King Singapore Pte Ltd.

For the nine-month financial period ended Sept 30, 2014, Rancak Selera dipped into loss of RM50.4 million compared with an income of RM29.8 million in the previous corresponding period. The loss was mainly due to the unrealised loss on fair value recognised on investment in Cosmo and BK Singapore.

Quantum Angel is a private equity firm managed by Zulu Capital Sdn Bhd, a private equity firm fund management company.

It was reported that a special purpose vehicle (SPV) would be set up post-acquisition of Rancak Selera, where Brahim’s will hold 80% in the SPV and Quantum Angel the remaining 20%.

Quantum Angel, which is led by Datuk Ahmad Zaki, is expected to lead this partnership.

Brahim's had earlier in a circular to shareholders said that the deal would also enable it compete more effectively with prominent fast-food chains like McDonalds and KFC (KFC Holdings Bhd), but Brahim’s will need to take measures to revive loss-making Burger King franchise in Malaysia and Singapore after the proposed acquision.

In the note, Brahim's also said the F&B industry in Malaysia is competitive and Burger King faces competition in terms of product innovation, product quality, price, brand recognition and marketing budget and resources, noting that Burger King competitors are mainly international burger fast food restaurants chain and home-grown burger restaurants.

Brahim's shares were down 4.38% to RM1.31 as at 3.22pm today, bringing a market capitalisation of RM311.9 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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