KUALA LUMPUR (Feb 8): Loss-making XOX Bhd has proposed to buy a 29.43% stake in sports apparel retailer Cheetah Holdings Bhd for RM44.62 million in cash.
XOX said the purchase of the 33.8 million shares at RM1.32 per share would represent a premium of 37.03% to the five-day volume weighted average market price of Cheetah’s shares up to Feb 3 of 96.33 sen.
The purchase — via wholly-owned subsidiary XOX (Hong Kong) Ltd — from Chia Yoon Yuen Holdings Sdn Bhd will be funded from internally-generated funds, XOX said in a filing to Bursa Malaysia.
The group said it found the deal to be sound as the Cheetah brand “is a long standing and institutionalised one in Malaysia, and dovetails well with the target market segment that XOX has dominance over (youth and lower income segment)”.
“In adapting to the changes in the business environment, besides continued improvement of the operational efficiency and minimising costs, the cross-selling of both Cheetah and XOX products will appeal to the youth market, which is XOX's intention to focus on this segment as the highest spending segment per capita on online purchases,” said XOX.
This acquisition would also provide co-branding awareness and product bundling synergy with XOX products and services, via its E-Commerce Marketplace and E-Sports ventures, the group said.
With XOX’s 20,000 dealers, they can also immediately increase their product offerings by featuring Cheetah products. “Acquiring a cornerstone stake will allow consignment options to be accessed, providing XOX dealers with the capability to increase their sales and turnover, benefiting both companies,” added XOX.
XOX’s shares closed down half a sen or 6.25% at 7.5 sen, valuing the group at RM282.54 million.
Cheetah was 9.5 sen or 9.5% lower at 90.5 sen, giving it a market capitalisation of RM115.5 million. Over the past year the stock has surged by three times from 30 sen.