DKSH purchase of Auric Pacific for RM480.9m fair, reasonable

the proposed acquisition is expected to contribute positively to the earnings of the enlarged DKSH group with the expected income from the Auric Pacific group in the near future.

KUALA LUMPUR: DKSH Holdings (Malaysia) Bhd's proposed purchase of  Auric Pacific (M) Sdn Bhd (APMSB) from its Singapore shareholder for S$157.67mil (RM480.9mil) cash is “fair and reasonable”, the independent adviser to minority shareholders said.

According to the circular to shareholders issued on Thursday, FHMM Corporate Advisory Sdn Bhd said the proposed acquisition was expected to contribute positively to the earnings of the enlarged DKSH Group with the expected income from APM Group in the near future.

“The enlarged DKSH Group will be able to enjoy synergistic benefits in terms of operations, procurement, increased distribution network and reduced administratuive cost, which will bode well for the enlarged DKSH Group,” it said.

“The enlarged DKSH Group will be able to enter into the food manufacturing industry with the house brands currenly held by APM Group.”

DKSH is involved in the fast moving consumer goods. In late December last year, it announced it was acquiring APMSB from Singapore-based Auric Pacific Group Ltd (APG). APG distributes chilled and frozen products in Malaysia.

In the announcement, DKSH intended to fund the proposed acquisition through its own funds and bank borrowings.

FHMM said the gearing of DKSH would increase from 0.05 times to 0.90 times after the proposed acquisition on the assumption that bank borrowings will be used to finance the entire purchase consideration.

FHMM also said APMSB  had recorded revenue of RM322.91mil in the latest trailing 12 months (TTM) management accounts up to Sept 30, 2018. Earnings before interest, tax, depreciation and amortisation (Ebitda) was RM34.16mil and net profit at RM25.80mil.

For FY ended Dec 31, 2017, its revenue was RM291.95mil and Ebotda at RM28.20mil while net profit was RM20.55mil. 

APG's subsidiaries are involved in a diverse range of businesses, which includes the distribution of FMCG, food manufacturing and retailing, restaurants as well as food court management.

The extraordinary general meeting to seek shareholders' approval will be held on Feb 22, 2019 at the Holiday Inn Kuala Lumpur, Gelnmarie at 10am.