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Tuesday, 9 May 2017

(The Star) Lay Hong selling 30% of G-Mart Borneo Retail

PETALING JAYA: Integrated poultry farmer Lay Hong Bhd is selling almost a third of its shares in a grocery unit to PanPages Bhd as it seeks to build up its online e-commerce business.

“PanPages has the know-how on promoting new products and services to the market.

“Hence the disposal of 30% of G-Mart will allow PanPages to participate in G-Mart’s equity and collaborate with Lay Hong in this changing marketplace for its online business,” Lay Hong said in a statement to Bursa Malaysia yesterday.

Under the deal, Lay Hong has proposed to dispose of a 30% stake in G-Mart Borneo Retail Sdn Bhd to PanPages for RM10.75mil.

PanPages is one of the leading small and medium enterprise solutions provider in South-East Asia.

Lay Hong told Bursa Malaysia that its grocery segment was the largest of all retail segments and was moving online.

Lay Hong said the total consideration of RM10.75mil was arrived at after taking into consideration G-Mart’s net assets as stated in the unaudited management account as at March 31, 2017.

According to Lay Hong’s 2016 annual report, due to the soft consumer sentiment, the group had reviewed its business plans and went on a cost reduction exercise and closed two non-performing G-Mart stores. It now has 16 stores in Sabah.

PanPages, in a separate statement, said its online product offerings had been moving to serve vertical industries such as industrial products, health and beauty and now food and beverage.

“As for Peninsular Malaysia where e-Grocery is gathering momentum, PanPages’ participation in G-Mart can produce synergetic effects for G-Mart’s and PanPages’ businesses,” it said.

The SSA, slated for completion within two months from date of signing, is not expected to have any material impact on the Lay Hong’s earnings per share, net assets per share, share capital and substantial shareholders’ shareholdings for the financial year ended March 31, 2017.

“The disposal is expected to have a positive impact the Lay Hong’s future earnings once the tie-up with PanPages is successfully imlemented,” Lay Hong added.

As for the RM87.6mil market cap PanPages, the company builds business portals and provides online and offline marketing solutions to SMEs and has an exposure in Thailand, Vietnam, Cambodia, Phillipines, Singapore and Indonesia.

It currently worked with Google, Facebook and Alibaba.com to provide marketing services. Panpages will fund the proposed acquistion via a combination of internally generated funds and bank borroiwngs.

The proposed acquisition is expected to increase PanPages gearing, depending on the amount of borrowings.

Both Lay Hong and PanPages shares closed unchanged at 88 sen and 34 sen, respectively.