GLOBAL Yellow Pages (GYP) is diversifying into the food business by increasing its stake in Yamada Green Resources to 18.57 per cent.
The deal involves a firm linked to well-known investor Sam Goi, who also holds stakes in both GYP and Yamada, a mushroom grower and processed food producer.
GYP will buy a block of Yamada shares held by Hydrex International - a special purpose vehicle owned by Mr Goi and angel investor Koh Boon Hwee. Mr Goi owns a majority stake in Hydrex.
The 8.48 per cent stake will cost GYP $11.63 million, or 27.5 cents apiece for the shares. This is based on the average price on May 30.
Hydrex will still hold an 8.43 per cent stake in Yamada after the sale is concluded, said GYP in a statement.
The second part of the deal will be done through a two-for-one share swap agreement between GYP and Yamada executive chairman and chief executive Chen Qiuhai.
GYP will issue 82.2 million new ordinary shares to Mr Chen in exchange for 8.25 per cent, or 41.1 million shares, in Yamada.
Mr Chen will then hold an 11.16 per cent stake of GYP and will be appointed as a non-executive director.
The two deals will lift GYP's stake in Yamada to 16.73 per cent on top of the 1.84 per cent stake it had already acquired on the open market last month, to give it 18.57 per cent in all.
Mr Goi had said in February that Yamada's stock was undervalued and had room for growth. Yamada shares more than doubled on Feb 20 to close at 30.5 cents after Mr Goi bought a stake in the firm through Hydrex.
Dubbed as the "Sam Goi" effect, this surge was also apparent with his investments in condensed milk producer Etika International and cocoa ingredient maker JB Foods.
However, the market's response to the GYP and Yamada alliance was lukewarm today.
Trading for both counters had resumed by 1pm after a suspension to announce the tie-up. GYP shares added 0.2 cents to 11.5 cents while Yamada stock was unchanged at 24.5 cents.