KUALA LUMPUR (April 6): HB Global Ltd has acquired a local poultry firm, KK Fresh Frozen Sdn Bhd, for RM30 million via the issuance of new shares.  The company is principally involved in the trading of frozen meat and poultry products such as raw chicken parts, beef cuts and lamb cuts via a business-to-business distribution model.

Under the deal, HB Global will issue 200 million HB Global shares at an issue price of 15 sen apiece to KK Fresh's managing director, Tan Hwa Sing, which will result in Tan emerging as a substantial shareholder in HB Global with a 20.5% equity interest, based on an enlarged share capital of 977.71 million shares.

Both HB Global and Tan inked a conditional share sale agreement (SSA) to effect the acquisition on Thursday (April 6).

Pursuant to the SSA, Tan provided a profit guarantee that KK Fresh shall achieve a minimum profit after tax (PAT) of RM3 million for the financial year ending Dec 31, 2023 (first profit guarantee period) and RM3.50 million for the one ending Dec 31, 2024 (second profit guarantee period).

“While HB Global and its subsidiaries will continue with its existing business in processing, packaging and producing the ready to serve food and frozen vegetables, the proposed acquisition represents a strategic move by the group as the group will be able to leverage on KK Fresh’s existing business to increase the range of products of the group,” HB Global said in a bourse filing.

The proposed acquisition will enable the enlarged group to provide a broader range of products to its clientele, thus enhancing its profitability, it added.  

The proposed acquisition, which requires the approval from Bursa Securities and HB Global's shareholders, is expected to be completed in the second half of 2023. M&A Securities has been appointed the principal adviser for the proposed acquisition.

Shares of HB Global settled unchanged at 15 sen on Thursday, giving the group a market capitalisation of RM117 million.