Food packaging manufacturer SCGM announced today that its shareholders had approved at the Extraordinary General Meeting the disposal of 100% equity interest in Lee Soon Seng Plastic Industries (LSSPI), a wholly-owned subsidiary of SCGM to Japanese parties, Mitsui & Co., Ltd and FP Corporation (Purchasers) for a total cash consideration of approximately RM544.38 million (Disposal Consideration).
The Disposal Consideration represents an implied EV/EBITDA multiple of approximately 10.60 times, computed based on an assumed EV of RM588.10 million and EBITDA of RM55.48 million for FYE 30 April 2021 (FYE2021) of LSSPI; and an implied price to earnings ratio of 16.03 times based on FYE2021 profit after tax of approximately RM33.95 million.
All the acquisition, Mitsui would take up 60% equity interest representing 63,879,754 LSSPI Shares for a cash consideration of RM326.63 million, while FPCO take up the remaining 40% equity interest representing 42,586,502 LSSPI Shares for a cash consideration of RM217.75 million.
To recap, Mitsui is a global trading and investment company listed on the Tokyo Stock Exchange of Japan. It has a diversified business portfolio that spans approximately 63 countries in Asia, Europe, North, Central & South America, The Middle East, Africa and Oceania with diverse core business portfolio covering Mineral and Metal Resources, Energy, Machinery and Infrastructure, and Chemicals industries.
Meanwhile, FPCO was incorporated in Japan on 24 July 1962 as Fukuyama Pearl Paper Manufacturing Corporation and subsequently changed its name to FP Corporation on 1 January 1989. FPCO was listed on the Tokyo Stock Exchange of Japan, principally involved in manufacturing and marketing of disposable food containers made of polystyrene and other compound resins as well as marketing of related packaging materials.
On a separatel note, LSSPI also entered into a conditional sale and purchase agreement with SCGM’s wholly-owned subsidiary Habipack Sdn Bhd for the transfer of three contiguous parcels of land with factory buildings and other ancillary buildings located at Mukim Senai, Kulai, Johor for a total cash consideration of RM18.80 million (Transfer of Properties).
On the Disposal Consideration of RM544.38 million, a total of RM425.56 million are earmarked for distribution to entitled SCGM shareholders; RM18.80 million for Transfer of Properties immediately upon completion of the disposal to the Purchasers; RM84.02 million is allocated for acquisition of new business/assets to be identified or for working capital within 24 months; and the remaining RM16.00 million is to defray estimated expenses for the said corporate exercises.
