SINGAPORE (July 1): Food court operator Koufu today said that its wholly-owned subsidiary Koufu Pte Ltd is acquiring four food manufacturing companies for a total consideration of $22.04 million from individuals Alex Ong, Irene Lee and Doreen Ong.
The four companies are Deli Asia, Delisnacks, Dough Culture and Dough Heritage (collectively the target group).
The target group is one of Singapore’s largest and most established manufacturer and producer of fried food and dough products, supplying frozen and partial fried food products to third party businesses, namely, food & beverage (F&B) operators, restaurants and F&B stalls at food courts, coffee shops and hawker centres.
Besides the supply of fried food products, the target group also licenses its Delisnacks brand to stallholders at hawker centres and coffee shops that retail the target group’s food products from their stalls.
The target group also retails fried food and dough products directly to consumers in various locations across Singapore, including suburban malls, under its Dough Culture brand.
Furthermore, the target group has existing production and warehouse facilities in Singapore. It utilises modern technology, equipment and production processes that drive high productivity in the manufacturing and storage of fried and partially fried food and dough products.
These food products are complementary to the range of dim sum food that Koufu is selling in its F&B retail stalls in its food courts and coffee shops. The target group is currently one of the biggest suppliers of fried food and dough products to Koufu.
Koufu intends to utilise the production facilities for its fried food and dough products before the expected completion of its new HQ and integrated facility (IF) in 2020. Upon completion of the IF, Koufu intends to gradually shift the production facilities and warehouse of the target group to the IF.
The aggregate cash consideration of $22.04 million is arrived at on a willing buyer willing seller basis. The consideration will be funded by internal resources, including the net proceeds received from the company’s initial public offering. Upon completion of the acquisition, Koufu will become the sole shareholder of the four companies.
In line with the agreement, vendors Lee and Doreen Ong have entered into a one-year agreement with Koufu to join the company as advisors upon completion of the acquisitions. And will thereafter continue to provide consultancy services for another year.
Pang Lim, Koufu’s executive chairman and chief executive officer said, “In line with our strategy to create new revenue streams, with this proposed acquisition, we will be gaining immediate access to third party businesses, both locally and in overseas markets, thereby strengthening our market share. Additionally, there will also be opportunities to expand our F&B retail business to include the supply of frozen and partial fried food products to supermarkets as well as export markets. We also intend to expand the current network of retail kiosks under the Dough Culture brand from the current seven to at least 20 in the next five years.”
“Looking ahead, we will also be able to reap economies of scale upon the consolidation of this manufacturing process at our new integrated facility, slated to be completed in 2020,” he adds.
As at 1.30pm, shares in Koufu are trading at 70 cents.
