PSC Corporation, the recently-renamed Hanwell Holdings, plans to spend $95.1 million to acquire new frozen food manufacturing businesses with operations in Taiwan, China and Singapore so as to speed up its growth in a related industry.
Under terms of the deal, PSC, which makes and distributes consumer staples, will pay using US$2.1 million in cash, and issue 219.7 million new shares at 42 cents, worth $92.3 million, to the vendors. The targets have a book value of $66.720 million.
The target companies are Dean Fa Food Co. (Taiwan) and Novel Food Manufacturing Co (Singapore), making brands such as the Qianye brand tofu that’s sold not only within China but also exported to US, Australia, Singapore and Korea.
The vendors are Lee Wen-Chung, Lee Yi-Ming, Lee Wen-Yuan, Liu Hsiu-Yun, Huang Wen-Liang, Ang Teck Hock, Ang Bock Hwee and Yin Wen Xin.
The issue price of the new shares is a premium of some 5.53% over the volume-weighted average price of 39.8 cents on June 3.
Upon completion of the deal, PSC’s own share base will increase by 39.7% to 773.1 million shares and the vendors will control 28.4% of the enlarged share base of PSC. However, none of the individual vendors will have a controlling interest in PSC.
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On a pro forma basis, the completion of the deal will see PSC’s NTA per share decrease from 70.88 cents to 59.36 cents; its earnings per share drop from 3.54 cents to 2.84 cents.
According to PSC, with this acquisition, it will gain the license to run food manufacturing and distribution operations in China as Dean Fa Suzhou holds the required licences and permits for these activities.
PSC will take over a manufacturing facility which sits on a plot of land with a remaining lease term of 39 years, plant and machinery, and a ready pool of workers to kick off the operations immediately.
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PSC’s executive chairman Sam Goi (picture) says the acquisition will enhance PSC’s core capabilities in food manufacturing and distribution, whilst harnessing synergies between the two companies.
“In particular, it provides a unique opportunity for us to tap into Dean Fa Food’s existing resources to expand our soybean production base beyond Singapore, and to gain a strategic foothold in China – one of the world’s biggest consumer markets,” he adds.
Henry Chu, PSC’s group CEO, calls this acquisition a “watershed development” for PSC as it gives the company the fastest route to expand its operations and distribution network.
PSC plans to call for an EGM to seek shareholders’ nod for this deal.
