KUALA LUMPUR: DKSH Holdings (Malaysia) Bhd's shareholders have approved the acquisition of Auric Pacific (M) Sdn Bhd (APM) from its Singapore shareholder Auric Pacific Group Ltd (APGL) for RM480.91 million.
APGL, through its subsidiaries, is into the supply of bakery and confectionery materials and other general products as well as a manufacturer of and dealer in butter, margarine and related confectionery products.
APM is known for its SCS butter/cheese, Buttercup luxury spread and Twin Cows blended spread.
It also distribute sauces and breakfast cereals such as Lee Kum Kee, Heinz, Kraft, McCain, Sara Lee and Berri.
APGL is 49 per cent-owned by Indonesian tycoon Stephen Riady and forms part of the sprawling conglomerate the Lippo Group that was founded in 1950, by Stephen’s father Mochtar Riady.
"We received majority approval from the shareholders to go ahead with this deal and it will be funded entirely through bank borrowings," said DKSH head of country management and vice-president of finance Nicholas McLaren.
"DKSH shareholders see the value in buying up APM which is strong in distribution of chilled and frozen foods which complements with our existing market expansion of consumer goods," he added.
A circular to DKSH shareholders highlighted DKSH's gearing would increase from 0.05 times to 0.90 times, after the acquisition.
When asked to comment on this, McLaren assured there was no reason to be alarmed as the business in Malaysia was backed by solid balance sheet of its global parent in Switzerland.
"Let me assure you that our business is based on sound fundamentals. We're able to service the repayment of bank borrowings," he said.
"It'll take three to six years to pare down gearing level and by the tenth year, we should be able to settle all our borrowings," he added.
To another query of if there would be retrenchment or voluntary separation scheme (VSS) for APM staff after the acquisition, McLaren said: "We don't foresee any redundancy or VSS. We plan to absorb all 196 staff to our existing 3,000-odd headcount. We're also keeping APM's factory in Shah Alam."