SATS, on June 8, has entered into a conditional sale and purchase agreement (SPA) to acquire an 85%-stake in Thailand’s Food City Company for a consideration of 484.5 million baht ($21 million).
The agreement was signed by SATS’s indirect subsidiary, SATS (Thailand) Co.
Food City’s current owner, Thai-listed Bangkok Ranch PLC, will retain the remaining 15%.
Under the agreement, Food City will fully settle all outstanding intragroup trade payables and intragroup trade receivables owed to or owing from Bangkok Ranch and its subsidiaries calculated as at Dec 31, 2020.
Outstanding amounts incurred after said date will be settled “in the normal course of business and credit terms”.
Food City is expected to execute the transitional services under the transitional service agreement with Bangkok Ranch after the completion of the acquisition.
Bangkok Ranch will execute a call option agreement with SATS, which gives the latter the option to acquire the remaining 15% stake it does not own in Food City.
Following the acquisition, SATS (Thailand) will own 7.85 million shares in Food City, representing an 84.97% stake. Bangkok Ranch will own 1.39 million shares, or 15% in Food City, while SATS Investment, a wholly-owned subsidiary of SATS, will own 2,400 shares, or 0.026% in Food City.
Food City’s main asset is the Pathumthani food production facility, which covers a land area of 30,000 sqm.
The facility benefits from the well-established food ecosystem in Thailand.
Following the acquisition, the facility will be configured to produce 90,000 ready-to-eat meals per day.
Based on Food City’s management accounts as at April 30, the company’s book value and net tangible asset value stands at around 521.5 million baht and 521.5 million baht respectively.
SATS says it has been investing in large-scale kitchens and food technologies to increase productivity and reduce wastage.
Following the completion of the transaction, SATS will own interests in 32 meal production facilities across Greater China, India, Indonesia, Japan, Macau, Malaysia, Maldives, Philippines, Thailand and Singapore.
"SATS will benefit from Food City’s scale, and location in the Thai food ecosystem to supply its growing customer base across the region, from aviation to foodservice and retail,” says Kerry Mok, CEO of SATS Food Solutions.
“This acquisition will strengthen our range of food technologies – fresh, cook-chill, ambient and frozen, to serve different customers’ needs,” adds Mok, who also shared that the acquisition of Food City, along with investments in advanced frozen and ambient food technology to extend product shelf-life, would allow SATS to further reduce food waste.
Shares in SATS closed 4 cents higher or 1% up at $4.05 on June 8.
