CI Holdings suspended

PETALING JAYA: Shares of diversified company CI Holdings Bhd were suspended yesterday and will remain suspended until tomorrow, on a strong chance that the company will announce the sale of its unit, Permanis Sdn Bhd.

The company told Bursa Malaysia that the request for suspension of trading was due to an impending material announcement in relation to a substantial transaction involving its subsidiary.

Speculation has been rife of late that Japan’s Asahi Group Holdings Ltd is looking to buy Permanis, driving up CI Holdings’ share price to new highs last seen since 2000. CI’s last traded price yesterday was RM4.08, hitting an intra-day high of RM4.12 before its shares were suspended in the afternoon trading session.

It had been previously speculated that Japanese beer maker Asahi -which is on an aggressive overseas merger and acquisition trail in order to counter the effects of a slumping domestic economy - has been eyeing Permanis.

Under Permanis, CI Holdings owns the local PepsiCo franchise and enjoys a distribution network of more than 40,000 outlets nationwide. Following news reports that CI Holdings may sell Permanis for US$200mil (RM600mil), CI Holdings told Bursa Malaysia earlier this month that the price tag did not reflect Permanis’ value. Permanis contributes up to 90% of CI Holdings’ net profit with the remaining coming from its tap and sanitary ware segments.

Under an exclusive franchise, Permanis produces world renowned brands such as Pepsi, Mirinda, 7-Up, Gatorade, Lipton, Tropicana and Evervess. Permanis also manufactures its own brands of drinks which include beverages under the trademarks of Chill, Excel, Frost, Bleu and Shot, according its website.

Analysts have said that CI Holdings could be at the losing end of the deal if it accepts the sale of Permanis as CI Holdings would be selling its mainstay business, which has a very enviable position.

CI Holdings and America-based PepsiCo Inc inked an exclusive bottling agreement last year, which renewed the franchise bottling rights of Permanis for another 10 years.

For the third quarter of its financial year ended June 30, CI Holdings posted a net profit of RM8.2mil on the back of RM140.1mil revenue compared with a net profit of RM10.95mil on the back of RM137.7mil revenue in the same period last year.

RHB Research has said previously in a note to its clients that assuming the sale of Permanis goes through, CI Holdings will be left with its tap and sanitary ware division and cash of RM600mil, which it could then use to acquire another core business, or return to shareholders in the form or a special dividend or capital repayment.