Wednesday, December 14, 2011

The KFC Takeover And The Power Of The Source

On Business Times this morning:

  • JCorp to take QSR Brands private?

    Francis Fernandez and Azlan Abu Bakar Published: 2011/12/14

    The exercise is imminent ... it could be as early as this week, says a source

    Johor Corp Bhd (JCorp) plans to take QSR Brands Bhd private, people familiar with the matter said yesterday.

    The deal may also involve KFC Holdings (M) Bhd, the source said.

    “The exercise is imminent ... it could be as early as this week,” said a source.

    At least two independent sources told Business Times that a deal was in the offing.

    JCorp owns 53 per cent of Kulim Bhd, which in turn owns some 57.5 per cent of QSR. QSR, in turn, owns 50.6 per cent of KFC, the country’s top fast food operator.

    “The deal could be done at the Kulim level, but JCorp is the driver for the exercise,” the source said.

    Top executives of Kulim and QSR, however, said they had no knowledge on the matter.

    “We at the operations side are not involved. We know nothing about it so we can’t give any comments,” QSR managing director Jamaludin Md Ali said, when contacted yesterday.

    Kulim managing director Ahamad Mohamad also said he had no knowledge of the matter and declined to comment.

    An insider in Kulim, meanwhile, said the matter had never been raised at the Kulim board level.

    In April this year, the Malay Chamber of Commerce offered to buy stakes in Kulim through its Johor chapter.

    The offer came months after Tan Sri Halim Saad had attempted to buy QSR’s business for RM1.62 billion.

    The offer, which had valued QSR shares at RM5.60 a piece, was eventually turned down by the ultimate owners of QSR.

    Halim’s November 2010 offer was not the only one on the table, as a slew of foreign firms, including venture capital companies, were said to have shown interest in QSR.

    The Carlyle Group had offered RM6.70 a share to gain a 100 per cent control of QSR.

    Others said to be interested in QSR at that point of time were CVC Capital Partners Asia Pacific, and even, perhaps, Kohlberg Kravis Roberts & Co, foreign reports suggest.

    QSR is a much sought-after asset as whoever controls the company will have control over KFC.

    KFC has franchises in Malaysia, Singapore, Brunei, Cambodia and India.

    It also operates the home-grown RasaMas chain of restaurants and Ayamas kiosks, while QSR operates some 260 Pizza Hut restaurants in Malaysia and Singapore.

    QSR shares closed 10 sen higher to RM6, while KFC shares closed 6 sen higher to RM3.41 yesterday.
And of the Edge just now...
  • Johor Corp, CVC Capital launch takeover of QSR, KFCH
    Written by Joseph Chin of
    Wednesday, 14 December 2011 18:49

    KUALA LUMPUR (Dec 14): Johor Corporation and CVC Capital Partners Asia III Ltd have teamed up to take over QSR BRANDS BHD [] and KFC HOLDINGS (M) BHD [] (KFCH).

    Johor Corp and CVC Capital had on Wednesday, made the offer via a special purpose vehicle Massive Equity Sdn Bhd (MESB) in which Johor Corp holds a 51% stake and CVC Capital 49%.

    MESB offered RM6.80 for the shares in QSR Brands Bhd and RM3.79 for the warrants. At RM6.80, this is 80 sen above the closing price of RM6 on Tuesday while the offer price for the warrants was a premium of 77 sen from the closing price of RM3.02.

    MESB also made an offer to KFCH of RM4 per share and RM1 per warrant. At RM4, this was 59 sen above the closing price of RM3.41 on Tuesday but five sen below the closing price of RM1.05.

    The securities were suspended from trading on Wednesday and resume on Thursday.

    Johor Corp owns 55.9% of KULIM (M) BHD [], which, in turn, owns 53.9% of QSR. QSR has a 50.93% stake in KFCH.

    Analysts had earlier expected only Johor Corp to take over QSR and KFCH and this did not include CVC Capital’s participation.

    “By taking QSR and KFC Holdings private, Johor Corp would have more control and direct ownership over the cash flows and dividends of the crown jewels, KFC and Pizza Hut. QSR and KFC Holdings generate strong operating cash flows of RM250m million to RM300 million per annum but Johor Corp only get to enjoy less than half of it given their current stakes.

    “A buyout of QSR and KFCH would increase the amount of dividends and cash flows that Johor Corp enjoys from this top fast food operator,” a research house said.

    In December last year, Johor Corp had stated it has no plans to sell its prized assets, QSR and KFCH, which are held through its subsidiary Kulim.

    Its president and chief executive Kamaruzzaman Abu Kassim had then said JCorp entered the quick service restaurants business in 2006 (through Kulim’s investment in QSR) and since then has seen tremendous growth in revenue and profit before tax (PBT) at an average of 13.8% and 3.7% per annum respectively.

    “The results from this segment had contributed significantly, making up 47.5% and 44.1% respectively to Kulim’s revenue and PBT in the financial year ended Dec 31, 2009.

    “It does not make sense to sell our core business,” he had then said in a statement.
Yeah, the power of the source...

Keyword: YESTERDAY ..... !!!!!


Another shiny day for Corporate Malaysia!



Moolah said...

No comments?

QSR, KFC and all their call warrants flew yesterday.

This source gave the news to BTimes on Wednesday. A day earlier.

If the source have such juicy details ahead, what's stopping the source from making a killing in these shares?

Is that not possible?

newbie said...

Dear Moolah,
The request for suspension came just some time short of the opening bell.'Reports' of takeover was published way early before that.Look at it another way,Moo.So what's stopping these people from making a killing?It pays to be a financial reporter,Moo..