AirAsia buys into supplier of its inflight tea and coffee

KUALA LUMPUR: AirAsia Bhd is acquiring an 80% stake in T&Co Coffee Sdn Bhd, which has been supplying inflight coffee and tea solutions to the airline since December 2013, for RM914,000.

In a filing with Bursa Malaysia, the budget carrier said it had entered into a share sale agreement with Datin Charlene Yeo Ming Ling to buy 881,873 ordinary shares of RM1 in T&Co, or 80% of the share capital of the company. 

AirAsia said the purchase consideration would be satisfied in part by cash of RM814,000 and in part by AirAsia credit shell of RM100,000 which may be used to pay for flights on all carriers within the AirAsia group. 

The carrier has also entered into a shareholders agreement with Yeo, her husband Datuk Douglas Cheng Heng Lee and T&Co to govern the foregoing parties’ relationship as the shareholders of T&Co.

“The purchase price of RM914,000 is based on the agreed valuation of RM1.14mil. 

“This was derived after taking into consideration T&Co’s net tangible assets (NTA) of RM280,586 as of June 2015 and the capitalisation of the amount owing to Cheng of RM852,341. 

“Upon capitalisation, the total shares of T&Co shall be increased to 1.102 million bringing up the NTA per share to RM1.03,” AirAsia said.

The carrier said the T&Co board would have three directors comprising two directors nominated by AirAsia and one by Yeo.

AirAsia rationalised that acquiring a majority stake in T&Co would allow the carrier greater management control of T&Co.

It said the acquisition would also allow Airasia to be more focused on product development and that coffee and tea were an important part of the inflight experience.

“A good coffee and tea offering would help AirAsia differentiate its brand in an increasingly competitive market. 

“It would also allow AirAsia Bhd to raise premiums on beverages as well as improve the margin,” it said. 

AirAsia added that T&Co had an existing relationship with green coffee bean suppliers and a master roaster in Australia as well as tea traders whose expertise AirAsia can tap to develop new coffee and tea products, such as the proposed “Asean blend” that would use of the best coffee beans grown in the Asean region.