Kim Teck Cheong inks MoU to acquire Sarawak-based distributor

by **Cals** Tue 12 Jan 2016, 00:44

Kim Teck Cheong inks MoU to acquire Sarawak-based distributor

By Chester Tay / theedgemarkets.com | January 11, 2016 : 10:30 PM MYT

KUALA LUMPUR (Jan 11): [size=16]Kim Teck Cheong Consolidated Bhd (KTC) ([You must be registered and logged in to see this image.] Valuation: N/A, Fundamental: N/A) has entered into a memorandum of understanding to acquire the entire equity stake in Sarawak-based Popular Trading (Borneo) Corporation Sdn Bhd, a distributor, wholesale trader and food manufacturer.

KTC said in a bourse filing that Popular Trading's business covers Sarawak, Sabah and Labuan, and that the acquisition will enable it to establish KTC's presence in Sarawak.

In a separate statement, KTC said Popular Trading is a popular household name in Sarawak with 48 years of experience.

"In view of this acquisition, KTC's revenue shall double, [while its] operations will be strengthened and presence in the state of Sarawak will be unparalleled," KTC group executive director Dexter Lau said.

"I am confident that this move, with Popular Trading's years of expertise in the industry and in the state of Sarawak, together with the commitment of their existing suppliers, is a win-win situation for both parties," he added.

Lau also said KTC entered the Sarawak market two years ago, and that its business in the state has grown by "strong" double digits since.

"This move will expand our trading business, network and infrastructure and also increase our human resource by three times our present capacity in order to meet with the huge expansion plans we have targeted and planned," he said.

The total estimated purchase consideration of the proposed acquisition will be based on a due diligence process that will take into consideration Popular Trading's net asset value, excluding investment in subsidiary companies, as at Dec 31, 2015 and the company's audited net profit after tax for the last three financial years.

Shares in KTC closed 0.5 sen or 1.11% lower at 44.5 sen today, which valued it at RM227.07 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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