Coffeeshop operator Kimly is acquiring a 75% stake in the Tenderfresh business for a consideration of $54 million, which will be satisfied by cash and the issuance of new shares in Kimly.
In an announcement dated May 11, the company says that it has entered into an acquisition agreement with Soh Chun King, Koh Siew Tin and Chew Kian Ho, founders of the Tenderfresh business. They will retain a 25% stake in the business post-transaction.
$34 million of the purchase consideration will be paid in cash, while $16 million will be satisfied through the issuance of 51.2 million shares in Kimly at 31.24 cents per share. A remaining $4 million will be paid in cash, subject to the Tenderfresh business achieving a profit before tax of $9 million for its FY2022 ending September.
The Tenderfresh business is said to comprise of central kitchens, restaurants, kiosks, food stalls, plant and equipment, trademarks and customer relationships, operated via various entities. It currently manages 14 concepts and 41 outlets, ranging from western fares and traditional local cuisines to food kiosks, catering, retail outlets and Original Equipment Manufacturing (OEM). It also currently operates a 25,000 square foot facility that is halal-certified, which caters to about 140 brands and outlets.
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The acquisition is expected to help diversify Kimly’s revenue streams and add a new food division to the group’s existing units which include Kimly Mixed Rice, Kimly Zi Char, and Rive Gauche Patisserie. Kimly also anticipates synergies to be unlocked with opportunities to cross-sell, enhance product offerings and streamline processes to save costs.
“With the acquisition of 75% stake in Tenderfresh Business, we are confident that this will further boost the resilience of our operations and revenue and have a positive impact on our earnings going forward which will enhance shareholder value. This is also an exciting opportunity to expand into the growing halal F&B market with a leading and well-established partner,” said the directors of Kimly.
Completion of the acquisition is expected to take place within five months, subject to fulfillment of conditions precedent.
Shares in Kimly closed at 32 cents on May 5 before trading was halted the same day.
