DKSH purchase of Auric Pacific fair, reasonable, says adviser

PETALING JAYA: DKSH Holdings (M) 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 a circular to shareholders, independent adviser FHMM Corporate Advisory Sdn Bhd said 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.

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

“The enlarged DKSH group would be able to enter into the food manufacturing industry with the house brands currenly held by the Auric Pacific group.”

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

In the announcement, DKSH said it 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 would be used to finance the entire purchase consideration.

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

For the financial year ended Dec 31, 2017, its revenue came in at RM291.95mil and EBITDA was at RM28.20mil, while net profit was at RM20.55mil.

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