KPS proposed RM116mil stake-buy under scrutiny


PETALING JAYA: Kumpulan Perangsang Selangor Bhd’s (KPS) plan to buy a 60% stake in a mattress maker for RM115.9mil cash may attract queries from shareholders at the group’s AGM this Friday.

This is the first major deal announced by the company since exiting the water concession business late last year.

KPS, which is 57.88% owned by the Selangor investment arm Kumpulan Darul Ehsan Bhd, said last week it was buying into a profitable company that generates licensing revenue of RM29.2mil last year from its businesses in 80 countries.

US-based King Koil Licensing Company Inc (KKLC) owns the King Koil trademark and provides research and development services relating to mattresses and bedding products.

KPS, on May 13, had entered into a share sale agreement with Yeoh Jin Hoe or the vendor to acquire 60% equity stake in the “King Koil®” mattress brand licensing business via Kaiserkorp Corp Sdn Bhd.

Kaiserkorp is the ultimate holding company of KKLC.

Yeoh, who holds 99.99% stake in Kaiserkorp, is also group managing director of Kian Joo Can Factory Bhd, its listed subsidiary, BOX-PAK (MALAYSIA) BHD. and a board member of CAN-ONE BHD.

KKLC has presence in over 80 countries via 31 licensees, with its headquarters in Illinois, the United States.

Upon completion of the proposed acquisition, Kaiserkorp will become a subsidiary of KPS.

On May 18, the SSA has become unconditional as all the conditions precedent have been fulfilled by KPS and the vendor.

According to KPS announcement, the RM115.6mil price tag is basically on willing buyer-willing seller basis.

KPS explained that the price takes into consideration of the established brand name of King Koil, future revenue to be generated from the licensing agreements and positive outlook on the global mattress industry.

On the rationale of the investment, KPS said King Koil is a profitable and cash generating business. Kaiserkorp revenue stood at RM29.2mil last year.

“The business had been consistently generating profits with double digit-earnings before interest, tax, depreciation and amortisation margin of over 25% from 2010 to 2014.

“The business also has strong dividend paying capability and history, with at least 80% of net profits distributed to the previous shareholders over the same financial periods,” it said.

Besides mattress, KPS had in March proposed an investment in a water associated business in Smartpipe Technology Sdn Bhd (SPT) for RM5.1mil.

SPT is involved in the marketing selling and installing of pipes selling and marketing of pipes and other products, knowhow and technology primarily for the rehabilitation of water mains, drains and sewers

KPS exited its water concession business when it disposed 90.83%-owned unit, Titisan Modal (M) Sdn Bhd, to Pengurusan Air Selangor Sdn Bhd for RM78.05mil late last year.

KPS is also letting go its 30% stake in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd which is expected to be completed soon.


   

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