12 July 2012
Hing Yiap Group Bhd plans to buy baby clothes-maker Anakku Sdn Bhd, lingerie-maker Audrey Sdn Bhd, Mickey Junior Sdn Bhd, Asia Brands Global Sdn Bhd, Asia Brands Assets Management Sdn Bhd and Asia Brands HR Services Sdn Bhd for RM 245 million deal, RM179.3 million cash payment and 30.1 million new Hing Yiap shares issued at RM2.18 each
In a move to expand its apparel business, Hing Yiap Group Bhd plans to buy six companies, including baby clothes-maker Anakku Sdn Bhd and lingerie-maker Audrey Sdn Bhd, for RM245 million.
Hing Yiap, which manages brands such as Antioni, Bontton and B.U.M Equipment, will be buying the companies from Asia Brands Corp Bhd (ABCB).
The deal will involve RM179.3 million cash payment and 30.1 million new Hing Yiap shares issued at RM2.18 each.
The cash portion will come from bank borrowings and internal funds.
The other companies it is buying are Mickey Junior Sdn Bhd, Asia Brands Global Sdn Bhd, Asia Brands Assets Management Sdn Bhd and Asia Brands HR Services Sdn Bhd.
"The board is of the view that the diversified range of established brands under the enlarged group will enable the company to further grow its market share domestically and take advantage of the positive outlook of the retail apparel industry," Hing Yiap said in a stock exchange filing yesterday.
The six companies made a collective net profit of RM28.7 million in the financial year ended March 31 2011.
Hing Yiap will be asking shareholders for approval on the deal at an upcoming meeting and has appointed Alliance Investment Bank to act as independent adviser.
Interested parties, including director Ng Chin Huat who is also a director and major shareholder of ABCB, will abstain from voting.
ABCB intends to renounce the 30.1 million shares it stands to receive to its shareholders.
The entire deal is expected to be completed by the end of this year.
Hing Yiap's shares, which were suspended from trading yesterday pending the announcement, was last traded at RM1.68.
Hing Yiap Group Bhd is acquiring six entities from Asia Brands Corp Bhd for RM245mil.
The six companies are Anakku Sdn Bhd, Audrey Sdn Bhd, Mickey Junior Sdn Bhd, Asia Brands Global Sdn Bhd, Asia Brands Assets Management Sdn Bhd and Asia Brands HR Services Sdn Bhd.
The purchase consideration is to be satisfied by cash of RM179.3mil with the balance of RM65.7mil to be satisfied via the issuance of 30,137,615 new ordinary shares of RM1.00 each in Hing Yiap at an issue price of RM2.18 per share.
Hing Yiap entered into a conditional share sale agreement with Asia Brands Corp on July 11, 2012.
In a filing to Bursa Malaysia, Hing Yiap said the main rationale for the acquisition was that the company was in the same apparel trading and retailing businesses as Asia Brands.
“The proposed acquisitions are expected to result in synergistic effects on the performances of the enlarged Hing Yiap Group via savings realised through the enlarged networks of customers, consolidation of operations, elimination of duplicate resources within the enlarged company and the potential increase in efficiency and effectiveness of its marketing and distribution channels.
“The effects of the synergies are expected to improve the revenue and profitability in Hing Yiap.
“Besides the greater economies of scale, the enlarged entity also expects to benefit from the increased and larger market share in the apparel trading and retailing businesses,” Hing Yiap said.
It added that with a larger market share, the company would increase customer and supplier base, enhance product range to cater to a diversified customer base, and sustain competitive advantages in the apparel trading and retailing businesses.
“The proposed acquisitions will also complement and enhance the product variety of the enlarged Hing Yiap Group with the babies' and children's wear, care and related products as well as the intimate women's apparel market segments.
“It will enable Hing Yiap to create an immediate strong presence in the market for babies' and children's wear, care and related products as the subject companies carry the home-grown brand Anakku which has been established for more than 30 years in Malaysia.
“The proposed acquisition would also allow the Hing Yiap Group to diversify its operations to include marketing and distribution of intimate women's apparel through new ownership of another home-grown brand, Audrey,” the company said.
According to Converging Knowledge's independent market research report dated Jan 1, 2012, the Anakku brand commands the largest market share of the domestic babies' apparel market at an estimated 28.1% (by revenue) and ranks number one in terms of number of points-of-sale in Malaysia.
The report also ranks the Audrey brand second (by revenue) in its business line with the highest number of points-of-sale in Malaysia. - Bernama