BreadTalk may benefit from delisting 'with freer hand to adapt'

Local icon will be delisted from SGX tomorrow with completion of its compulsory acquisition

Toast Box and BreadTalk outlets at Bishan Junction 8 mall. BreadTalk's delisting is expected to give it greater flexibility as it tackles the coronavirus pandemic and the impact Covid-19 has had on its F&B operations, observers said.
Toast Box and BreadTalk outlets at Bishan Junction 8 mall. BreadTalk's delisting is expected to give it greater flexibility as it tackles the coronavirus pandemic and the impact Covid-19 has had on its F&B operations, observers said.ST PHOTO: LIM YAOHUI

Local icon BreadTalk Group will be delisted from the Singapore Exchange tomorrow, with the completion of its compulsory acquisition by offeror BTG Holding.

With this development, founder George Quek comes full circle as he takes private the food and beverage (F&B) company he started in 2000.

BreadTalk's creations made the bakery the talk of the town at the time for its visually appealing and tasty breads.

Mr Quek and his wife are partners with Thailand-based hospitality company Minor International in forming offeror BTG Holding.

In a bourse filing yesterday, BreadTalk said the delisting will take effect at 9am tomorrow.

BreadTalk's delisting is expected to give it greater flexibility as it tackles the coronavirus pandemic and the impact Covid-19 has had on its F&B operations, observers said.

"As a private company, it will be at more liberty to restructure without the hassle of answering to shareholders and obtaining shareholders' approval for major corporate decisions," DBS analyst Alfie Yeo said.

Associate Professor Lawrence Loh at the National University of Singapore Business School said that while the decision for the company to delist was probably made before Covid-19 hit Singapore's shores, it may be a blessing in disguise for BreadTalk.

"Delisting will allow BreadTalk to adapt quicker to the challenges (amid the pandemic) and possibly diversify into other opportunities beyond F&B, as it consolidates its business portfolio."

BreadTalk suspended trading of its shares on April 21 ahead of its application to delist.

In February, BTG Holding made an offer to buy back all issued ordinary shares at 77 cents apiece.

  • Founder George Quek started BreadTalk in 2000, creating a food and beverage (F&B) empire over the years as it added brands such as Food Republic and Toast Box.

    It was listed on the Singapore Exchange's Catalist board in 2003, before moving to the mainboard in 2009. Mr Quek and BreadTalk have been lauded with many awards for innovative products.

    But the group has hit troubled waters recently.

    Mr Quek, who is executive chairman of the group, has taken a more active role in the past year, and is now also serving as interim chief executive.

    His 40 years of experience in the F&B sector will be much needed to guide BreadTalk in its next stage of development amid a trying pandemic.

MORE LIBERTY TO RESTRUCTURE

As a private company, it will be at more liberty to restructure without the hassle of answering to shareholders and obtaining shareholders' approval for major corporate decisions.

DBS ANALYST ALFIE YEO, on BreadTalk's delisting.

In a note then, DBS analysts Mr Yeo and Andy Sim recommended shareholders accept the offer as it was higher than the bank's valuation of BreadTalk's shares, and was also above the company's share prices in the previous eight months. BreadTalk, which posted a net loss of $5.8 million for the whole of last year, has faced financial struggles in recent times.

Weak bakery performance and operating losses in China and Hong Kong have been highlighted as reasons for the earnings hit.

It said in exchange filings earlier this year that its operating environment "remains challenging across key markets, including Singapore, China and Hong Kong".

The pandemic has further weighed on the group, which also operates F&B outlets Food Republic and Toast Box.

In March, BreadTalk said it was cutting salaries of senior management and middle management executives, with employees taking pay cuts of between 10 per cent and 50 per cent from March to this month.

Prof Loh said delisting also allows BreadTalk to rationalise its capital structure. He added that as a private company, it would not be solely reliant on public listed funds, and would have greater access to capital injection, such as from Mr Quek.

 

DBS' Mr Yeo said BreadTalk, like other F&B players, may have to reconsider how it operates given the impact of the Covid-19 pandemic.

"If the new normal footfall is considerably lower over the long term, then we could possibly see an oversupply of F&B outlets - which means the number of F&B outlets may have to rationalise," he noted.

BreadTalk has had reshuffles at the top in the past year.

Former chief financial officer and chief investment officer Chan Ying Jian resigned from BreadTalk in January, with Mr Quek taking over in overseeing the group's accounting, financial, treasury and tax matters. Mr Quek also took on the role of interim chief executive in September after Mr Henry Chu quit for health and personal reasons.

A version of this article appeared in the print edition of The Straits Times on June 04, 2020, with the headline 'BreadTalk may benefit from delisting 'with freer hand to adapt''. Subscribe