Incredible Holdings believes it is not necessary for a valuation exercise to be done for the planned acquisition of a retail business in Denmark, as the target has yet to start operating and therefore, there’s no historical track record to form the basis of the valuation.
Incredible was responding to a lengthy series of queries by the SGX RegCo, following the company’s June 9 announcement that it plans to buy a Danish company selling watches, gold, silver and other jewellery in an all-cash deal of DKK5,200,000, or around $1.128 million. Upon completion, Incredible expects to book a goodwill of $1.1 million.
The target company, HB 2021 ApS, is operating out from a 473 sqm space in Copenhagen, Denmark, and is desired by Incredible as it can “explore and/or expand its trading of luxury goods business in Denmark to enhance its future value.”
See more: Incredible Holdings to buy Danish jewellery company for $1.128 mil
Incredible further explains that the decision to acquire this company was so that it can enjoy significant time savings instead of setting up its own retail business from scratch.
“In other words, it would take time to locate a shop, time and cost to renovate the shop to the same standard, time and cost to install the same level of security improvements,” says Incredible.
The company maintains that the price to be paid is fair, “given that the renovation costs for the boutique is in line with market rates and is in the best interest to acquire the target for the group’s expansion strategy.”
Incredible also notes that its sole executive director, Christian Kwok-Leun Yau Heilesen, originates from Denmark, and got to know the sellers of HB 2021 ApS through his network in his home country.
In response to SGX’s queries on who the sellers and current operators are, Incredible would only list their names Peter Jens Bech and Lasse Holm Andersen. When Incredible announced the acquisition on June 9, they were known as Wingfort ApS and LHA ApS respectively. Incredible says there’s no prior relationship with the sellers.
Other questions that SGX RegCo posed included asking if Heliesen - who is proposed to be a director in the target company - is able to devote sufficient time and attention to all his engagements.
This is given that he is executive director of Incredible, the executive director of another SGX-listed company Ntegrator International, and holds directorships in around two dozen other private companies.
According to Incredible, Heilesen has confirmed he is able to devote sufficient time to all his engagements and that the company will appoint relevant people and expertise to run the operations of the target company.
“He is the key person for oversight and control over the business. The management of all listed companies and private companies are assisting him on the daily operations, developing and managing the business development strategies, establishing new business opportunities for growth and expansion.”
Incredible also notes that Heilesen is appointed as director of the target for “bank authorized signatory purpose”, so as to ensure a smooth transition in the acquisition.
Heilesen has been in the news after his sudden takeover of Ntegrator in April, replacing almost all of the old board and installing himself and three others as new directors of Ntegrator.
Incredible shares closed at 0.5 cent on June 15.
