Kulim today said private equity firm Carlyle had offered to acquire its majority-owned QSR Brands for about RM1.94 billion, topping a previous offer from a company linked to tycoon Tan Sri Halim Saad. Carlyle Asia’s offer of RM6.70 a share for the majority owner of KFC and Pizza Hut in Malaysia is 20 per cent more than Idaman Saga’s offer of RM5.60 a share earlier this week and QSR’s current stock price.
“It’s a very lucrative offer and it’s hard to imagine somebody up that number,” said an analyst with an international brokerage who could not be named as he is not authorised to speak to media. The offer values QSR at 20 times forward earnings compared with its current valuation of about 15 times earnings.
QSR’s sale will automatically trigger a general offer for KFC Holdings, the jewel in QSR’s stable of companies. KFC, the 51 per cent-owned subsidiary of QSR, owns US based Yum! Brands’ Kentucky Fried Chicken franchises in Malaysia and Singapore. “It’s already a good price at RM5.60 because QSR by itself is of little value. The value of QSR lies in KFC,” said the analyst.
“At RM5.60, it was valuing KFC at 20 times earnings. At RM6.70, it could value KFC at about 25-26 times.” KFC currently trades at 21 times earnings, well above the sector average of 17.8 times. Four analysts rate it “buy” or “strong buy” compared with two with a “sell” recommendation.
Kulim, which gets about 60 per cent of its profits from its plantations business, holds a 55 per cent stake in QSR Brands. The sale of QSR Brands will provide a quick injection of about RM1.07 billion for Kulim, which is owned by the debt-laden state investment arm Johor Corp.
In a statement to the local bourse, Kulim said its board will deliberate on the offer and that Carlyle had not indicated a time-frame for the offer. It also said QSR and its subsidiaries will not raise capital or declare dividend, while Carlyle conducts due diligence on the company.
Carlyle, a US buyout fund with US$90.9 billion (RM281 billion) in assets under management, has been eyeing deals in emerging markets of Asia and Africa. Earlier this year, it had raised an additional US$2.55 billion for deals in Asia, taking the total of Carlyle capital committed to Asia outside of Japan to more than US$5 billion.
Shares of QSR were up 2.75 per cent, KFC was up 0.77 per cent and Kulim shares were up more than a per cent, before being suspended for trading on the local bourse. — Reuters
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