PETALING JAYA: Coffee manufacturer and operator of cafe outlets OldTown Bhd has received notice of a buyout offer from Dutch coffee company Jacobs Douwe Egberts (JDE) in deal worth RM1.47bil.
JDE, which marked its first foray into Asia with the completion of its S$1.45bil (RM4.37bil) acquisition of Singapore-listed Super Group in June, is pricing its offer at RM3.18 per OldTown share.
The buyout offer is conditional upon approvals from antitrust authorities.
This represents 10.42% premium over the group’s last transacted share price on Dec 7, 2017 and works out to a multiple of 22 times of OldTown’s earnings.
OldTown, in a filing with the stock exchange, said shareholders of OldTown holding about 51.45% of the total issued share capital of the company had irrevocably undertaken to tender all their shares in acceptance of the offer.
If the deal goes through, it said, JDE intends to delist and privatise the group, enabling the buyer to have greater control and management flexibility as well as dispense with compliance costs associated with its listed status.
Bloomberg data show that OldTown currently trades at a historical price earnings of 19.9 times and forward earnings of 19.2 times.
Notably, JDE’s price of S$1.30 per Super Group share worked out to an implied 2017 price earnings multiple of 30 times earnings, according to a report by UOB KayHian.
The report also indicated that this was above the industry average price earnings ratio (PE) of 20 times earnings.
For OldTown, JDE’s offer price is also above the Bloomberg analyst consensus 12-month target price of RM2.91.
Bloomberg data also listed six buy calls and two hold calls for OldTown.
Shares of OldTown, which has been listed since July 2011, have shot up over the past week, rising 18.5% or 45 sen since Nov 29 to close at RM2.88 on Friday.
In its filing with the stock exchange, the group said the buyout offer by JDE would not be made until all the pre-conditions of the deal were satisfied on or before Aug 11, 2018.
“The offerer’s announcement does not amount to a firm intention to make the offer by the offerer, and accordingly, there is no certainty that the offer will be made even if the pre-conditions are satisfied,” it said, urging shareholders to exercise caution when dealing with the shares.
Upon the satisfaction of these conditions, it said, JDE will announce and issue a notice of its firm intention to make the voluntary conditional general offer.
Among the two pre-conditions is a filing to be made to and accepted by the Competition Commission of Singapore and the commission issuing a decision allowing the offer to proceed without conditions or on conditions satisfactory to the offerer.
The second condition is related to the offerer making relevant applications, filings and/or responses to the relevant anti-trust authorities in the event that the deal triggers any such authorisations.
It also noted that JDE has agreed to pay a good faith fee of US$3.4mil, equivalent to 1% of the total offer price to the group.
The advisers to the deal are Evercore Asia (Singapore) Pte Ltd and CIMB Investment Bank.
The offer notice is from Jacobs Douwe Egberts Holdings Asia NL BV, an indirect unit of JDE, which is a leading global pure-play consumer packaged goods coffee company.
JDE serves customers in over 120 countries through brands including Jacobs, Tassimo, Moccona, Senseo, L’OR and Douwe Egberts.
In a statement, JDE CFO Fabien Simon said the team at OldTown had built an impressive footprint of FMCG and F&B businesses across the Asia Pacific region.
“The OldTown team is focused on delivering premium, high-quality products to consumers and we see huge potential in the business,” he said.
OldTown group managing director Lee Siew Heng said they looked forward to drawing on JDE’s global expertise and building a highly successful partnership.
“We strongly believe JDE is the ideal partner as we continue to serve best-in-class products to our customers,” he said.
OldTown Group is involved in cafe chain operations and the manufacturing, marketing and sales of coffee and other beverages, including instant coffee mix, instant milk tea mix, instant chocolate mix and roasted coffee powder.
Its products are sold in more than 17 markets including in Malaysia, Hong Kong, China, Macau, Singapore, Taiwan, the US, Canada, Indonesia and the Philippines.